IMF Latest: Lagarde Says ECB Will Act Again If Needed

European Central Bank President Christine Lagarde said officials will raise interest rates again if they have to, but they’re also gauging the impact of prior moves still feeding through.

(Bloomberg) — European Central Bank President Christine Lagarde said officials will raise interest rates again if they have to, but they’re also gauging the impact of prior moves still feeding through.

Speaking to Bloomberg Television’s Tom Keene during a panel discussion in the Moroccan city of Marrakech, she said that policymakers are judging “multiple moving parts” that will affect the outlook of economies in the euro zone and around the world, including how previous hikes in borrowing costs are taking effect.

Leaders of the global economy are attending the annual meetings of the International Monetary Fund and World Bank here to discuss challenges including poverty reduction, climate change and easing the debt burden of the world’s poorest nations. The ongoing Israel-Hamas war is adding additional uncertainty to the global outlook.


Bullard Says May Need More Fed Hikes If Inflation Quickens Pace (3:51 p.m.)

Former Federal Reserve Bank of St. Louis President James Bullard said investors were too complacent on inflation and the central bank might have to increase interest rates as high as 6.5% if it starts to rise again.

“The risk that’s underpriced in markets is that disinflation stalls out or stops altogether and core PCE inflation starts to go up again,” he said Friday in Marrakech. “That would start a whole new round of consternation among policymakers about whether they’ve done enough.”

“If that happens the committee will have to contemplate going to 6% or 6.5%,” said Bullard, who stepped down from the Fed in August to take a job in academia.

Yellen, PBOC’s Pan Hold ‘Substantive and Productive’ Talks (3:49 p.m.)

US Treasury Secretary Janet Yellen and Pan Gongsheng, governor of the People’s Bank of China, held talks Friday in Marrakech, Morocco, extending a series of high-level meetings that could lead to another summit for Presidents Joe Biden and Xi Jinping next month.

“During the substantive and productive meeting, Secretary Yellen and Governor Pan exchanged views on macroeconomic and financial developments,” a Treasury spokesperson said in a statement after the two officials met on the sidelines of annual meetings for the International Monetary Fund and World Bank.

ECB’s Knot Says Too Early to Declare Victory Over Inflation (2:42 p.m.)

ECB Governing Council member Klaas Knot said the evidence was stacking up that tighter monetary policy is feeding into the eurozone economy but “we must remain cautious.”

“It is still too early to declare victory over inflation,” he said in Marrakech.

Egypt Seeks to Boost IMF Loan (12:41 p.m.)

Egypt is in talks with the IMF on augmenting its rescue program to over $5 billion, according to people familiar with the discussions, confident it can overcome the roadblocks facing its existing package by addressing concerns including its currency policy. 

Any announcement on a potential increase from the $3 billion secured last year would only come after Egypt completes its two delayed program reviews, said the people, who asked not to be identified as the matter is confidential. No decision has yet been made, they said.

Africa To Feel Impact of Slowing China, IMF Says (11:15 a.m.)

Sub-Saharan Africa’s growth will be hit by China’s slowing economy, the IMF said, urging countries in the region to do more to adapt to slowing import demand and declining Chinese economic engagement.

A one percentage point decline in China’s real GDP growth rate leads to about 0.25 percentage point decline in in sub-Saharan Africa’s total GDP growth within a year, IMF economists including Hany Abdel-Latif wrote in a report. Oil exporters would experience the largest impact, it added.

IMF Warns of Spillover From China’s Property Woes (11:02 a.m.)

IMF economists warned that China’s real estate sector downturn could erode growth prospects in the Asia Pacific region, which is already seeing signs of its recovery losing steam. 

“In the near term, the sharp adjustment in China’s heavily indebted property sector and the resulting slowdown in economic activity will likely spill over to the region, particularly to commodity exporters with close trade links to China,” IMF economists Yan Carrière-Swallow and Krishna Srinivasan wrote in a report.

IMF Aims to Cut Time for Creditor Assurance (10:11 a.m)

The IMF’s chief set an ambitious target to reduce the time needed to agree on deals to help poorer nations in debt distress, following criticism it’s been taking too long to aid the world’s neediest nations.  

Managing Director Kristalina Georgieva said she wants to reduce to just 2-3 months the time between when countries with distressed debt reach a staff-level deal with the institution to when they secure the creditor assurances needed for loan approval.


Visco Says Italy Spreads Don’t Require Intervention (9:31 a.m.)

Italy’s widening bond spread levels aren’t worrying and won’t require intervention from the European Central Bank, Governing Council member Ignazio Visco said.

“There are no signs really,” the Italian central bank chief told Bloomberg TV. If central bank intervention were needed, “I think we can” do so, he said Friday in Marrakech.

World Bank Head Seeks Record Help Aiding Poorest Nations (9:20 a.m.)

World Bank President Ajay Banga urged the lender’s members to make record contributions in the next funding round for its arm that helps the 75 poorest nations, warning of declining progress in the fight against poverty. 

“We are pushing the limits” of the International Development Association, Banga said in Marrakech, Morocco, according to remarks prepared for the plenary of the bank’s annual meeting Friday. “No amount of creative financial engineering will compensate for the fact that we need more funding.”

–With assistance from Ekow Dontoh, Eric Martin, Abeer Abu Omar, Jana Randow, Mirette Magdy, Martha Beck, Kamil Kowalcze and Ana Monteiro.

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