The 11th interest rate hike since March 2022 by the United States Federal Reserve on Wednesday can help to ensure that the inflation rate falls. — AFP
TRENDS in inflation have been encouraging, both locally and globally, but new risks have emerged that have caused food and energy prices to spike yet again, which suggests that inflation could remain elevated or even resurge.
Globally, the International Monetary Fund (IMF) projects that headline inflation will fall to 6.8% in 2023 and 5.2% in 2024, from 8.7% in 2022. The 11th interest rate hike since March 2022 by the United States Federal Reserve on July 26, and further expected tightening by the European Central Bank, will help to ensure this positive outcome. However, despite the progress, inflation still remains well above central bank targets, which stand at 2% in most advanced economies. IMF chief economist Pierre-Olivier Gourinchas estimates that it will take till the end of 2024 or early 2025 before inflation can reach that level.
