The International Monetary Fund is urging the federal government to quickly repair the budget and the Reserve Bank to keep lifting interest rates, warning there are growing risks inflation will become entrenched and devastate the living standards of ordinary people.
“It is going to be a tough 2022 – and possibly an even tougher 2023, with increased risk of recession,” she said. On Wednesday, the central banks of New Zealand and South Korea lifted their cash rates by half a percentage point. South Korea is now at 2.25 per cent while NZ, which started increasing rates in October last year, is at 2.5 per cent.Georgieva revealed the IMF, which provides policy advice as well as cheap loans to nations around the globe, would downgrade its forecasts for global growth this year and next in its outlook update that will be released later this month.
The IMF head said governments had to help central banks by tightening fiscal policy through cuts in expenditure. Australian federal government gross debt last week reached a record $895.2 billion and is forecast to surpass $1 trillion by 2024.Alex EllinghausenOn Wednesday, the treasurer said that update would contain new forecasts for inflation, wages growth and GDP and what they will mean for the budget.
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