IMF Warns About Fiscal Risks and Central Banks' Caution Regarding Interest Rate Cuts

The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, stated on Friday that governments around the world need to rebuild their fiscal capacity and that central banks must be very cautious when deciding when to cut interest rates.

In a meeting filled with uncertainty, Georgieva expressed, "In the short term, our priority must be to focus on the fiscal issue. Fiscal margins have tightened, but the pressure is high." During a press conference at the annual meetings of the IMF and World Bank (WB) in Washington, she emphasized that central banks need to "remain vigilant, rely on available information (and) analyze the data to avoid the mistake of cutting rates too early or too late."

This meeting in Washington included more than 10,000 representatives from ministries of finance, central banks, and civil society organizations, who discussed efforts to boost global growth, address the debt crisis, and finance the energy transition. However, the most significant topic that remains unspoken is the potential victory of Donald Trump in the U.S. presidential elections on November 5. There are concerns that this scenario could disrupt the global economic system with new tariffs, colossal debt for the United States, and a decrease in cooperation on climate issues. Information from Reuters.

It is crucial to observe how these warnings from the IMF could influence decision-making by central banks and governments, especially in a context of global volatility. Caution in fiscal and monetary policies will be essential to avoid further economic imbalances and protect stability worldwide. Decisions made today will have long-term repercussions on both the Mexican economy and the global economy.