IMF chief says Fed rate hike could ‘throw cold water’ on global recovery

IMF chief says Fed rate hike could ‘throw cold water’ on global recovery

International Monetary Fund Managing Director Kristalina Georgieva speaks at a press conference in Washington D.C., on March 4, 2020.
Liu Jie | Xinhua | Getty Images

Kristalina Georgieva, managing director of the International Monetary Fund, has said that interest rate hikes by the Federal Reserve could “throw cold water” on already weak economic recoveries in certain countries.

Georgieva, speaking via videoconference at The Davos Agenda virtual event on Friday, said an increase in U.S. rates could have significant implications for countries with higher levels of dollar-denominated debt.

She said it was therefore “hugely important” that the Fed was clearly communicating its policy plans to prevent surprises.

On a panel moderated by CNBC’s Geoff Cutmore, Georgieva said the IMF’s message to countries with high levels of dollar-denominated debt was: “Act now. If you can extend maturities, please do it. If you have currency mismatches, now is the moment to address them.”

The IMF expects the global economic recovery to continue, Georgieva said, but stressed that it was “losing some momentum.”

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