WEBVTT - IMF MD Kristalina Ivanova Georgieva Talks Inflation

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio News. We've got the managing

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<v Speaker 1>director of the International Monitoring Front, Crystalina gr Gaba, with

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<v Speaker 1>us here in the studio, with us in the Plaza Hotel.

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<v Speaker 2>Pret's welcome, great to be with you.

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<v Speaker 1>We're here focused very much on climate solutions, on the

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<v Speaker 1>challenges at the climate crisis has presented us as well.

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<v Speaker 1>But I want to ask you about the situation facing

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<v Speaker 1>the global economy. We've had the FED has cut interest rates,

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<v Speaker 1>It's joined the easing party that global central banks have

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<v Speaker 1>been taking in the past couple of months. We're about

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<v Speaker 1>a month away from the update of the next IMF

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<v Speaker 1>Global Economic Forecast. What's your reading now onto where we

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<v Speaker 1>are in the global economy, how much those central bank

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<v Speaker 1>right cuts are going to help?

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<v Speaker 2>Well? The global economy has been remarkably resilient, despite the

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<v Speaker 2>horrendous shocks of the last years, despite of interest rates

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<v Speaker 2>fighting inflation. For the last more than year, we have

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<v Speaker 2>seen global growth holding. We project three point two percent

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<v Speaker 2>this year three point two percent next year. The two

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<v Speaker 2>engines of this performance US economy and most of Emerging Asia,

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<v Speaker 2>especially India. Assian we are now seeing interest rates in

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<v Speaker 2>most economy is going down, and rightly so, because we

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<v Speaker 2>also see the price being paid for interest rates being high.

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<v Speaker 2>It is affecting somewhat prospects for growth in major economies.

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<v Speaker 2>Two very important points for your audience. Number One, yes,

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<v Speaker 2>growth is holding, but by historic standards it is not

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<v Speaker 2>high enough to retain good prospects for our economies before

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<v Speaker 2>the pandemic average growth three point eight percent. Two, we

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<v Speaker 2>also have very high debt levels and that combination of

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<v Speaker 2>slow growth and high debt is something that we at

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<v Speaker 2>the Fund worry about. What we want to see is

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<v Speaker 2>countries taking seriously the importance of fiscal prudence. So the

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<v Speaker 2>center banks have done their job. They fought inflation. Inflation

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<v Speaker 2>is going down, rates are going down. We need the

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<v Speaker 2>fiscal site to be equally committeed. And of course we

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<v Speaker 2>want to see more attention as to what drives growth.

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<v Speaker 3>I want to go back to inflation now with the

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<v Speaker 3>Fed finally making that big mood last week, that have

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<v Speaker 3>a point card Inflation defeated, Mission accomplished done or would

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<v Speaker 3>you say not necessarily yet watch it.

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<v Speaker 2>Yes, we are in a very good place. We have

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<v Speaker 2>been predicting soft lending. We would see inflation down and

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<v Speaker 2>growth still remaining firmly in positive territory. This is where

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<v Speaker 2>we are. We know that in the services inflation is

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<v Speaker 2>still flaring a little bit more so the FAT is

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<v Speaker 2>going to watch it. But broadly we think that the

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<v Speaker 2>FED got it right and we would see how that

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<v Speaker 2>evolves in the next meeting of the FAT. Not to

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<v Speaker 2>exclude that could be more cuts. But again, why is

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<v Speaker 2>the FED successful Because it is data driven, so they

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<v Speaker 2>would watch inman data very carefully.

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<v Speaker 1>I take note that you're worried about the fiscal side, though,

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<v Speaker 1>how big a risk is what you're hearing in the

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<v Speaker 1>US election campaign that's going to have a huge impact

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<v Speaker 1>on US RISCO policy.

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<v Speaker 2>Look, I mean, let's first give credit where credit is due.

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<v Speaker 2>The US has helped the world economy to stay afloat

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<v Speaker 2>in this very difficult time. So when we think about

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<v Speaker 2>the response to the pandemic, the response to the war

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<v Speaker 2>in Ukraine, these spike of energy and food prices, having

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<v Speaker 2>the US economy to perk in the way it did

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<v Speaker 2>a very good news for everybody. This being said, we

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<v Speaker 2>have to all think of the piece that may be

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<v Speaker 2>around the corner. What we learned in these last years

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<v Speaker 2>is that we are in a more shock front world

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<v Speaker 2>and having fiscal space to act should that become necessary.

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<v Speaker 2>Is a message we sent to all our members.

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<v Speaker 3>Is I remember one risk the fiscal possession of the

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<v Speaker 3>United States and other well, I mean.

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<v Speaker 2>The United States has the ability to fund itself in

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<v Speaker 2>a fairly comfortable manner, right, what we see in some

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<v Speaker 2>other countries they don't quite have that privilege. So the

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<v Speaker 2>pressure for imminent action, of course, differs in different places.

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<v Speaker 2>We do we have been saying that make sure that

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<v Speaker 2>you are not pushing prices up by getting more money

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<v Speaker 2>into the economy the economy than the economy can handle.

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<v Speaker 2>So be careful.

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<v Speaker 3>But you don't worry about the the US Federal Bank

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<v Speaker 3>in particular that by that half a point content there

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<v Speaker 3>maybe are putting a little bit more stimulus when the

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<v Speaker 3>economy seems to be doing well.

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<v Speaker 2>Right, there's growth, Yeah, the economy is doing well. Labor markets.

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<v Speaker 2>You actually are reporting in your program that consumers seem

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<v Speaker 2>to be saying, well, you're not as confident as we

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<v Speaker 2>were before. Let's remember that when you have interest rates

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<v Speaker 2>so high, that has impact, and it is the desired

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<v Speaker 2>impact to bring inflation down, and the accompany not so

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<v Speaker 2>desired to impact on consumer and business confidence. So my

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<v Speaker 2>message is the following. We have to all be very

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<v Speaker 2>watchful of whether there is risk of inflation to flare

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<v Speaker 2>up again. What is happening around the world. You know,

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<v Speaker 2>we just saw in the Middle East spike of a

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<v Speaker 2>war with the accompanying not big but still visible impact

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<v Speaker 2>on our prices. So we are not I mean, as

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<v Speaker 2>the movie would go, we are not encances anymore. We're

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<v Speaker 2>in a different world, more shockpron more unpredictable. Keep your

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<v Speaker 2>powder dry, don't use all of it at once.

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<v Speaker 1>One of the shocks that did upend the global economy

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<v Speaker 1>is Russia's war in Ukraine, and the Fund was criticized

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<v Speaker 1>recently for planning to restart annual economic consultations with Russia.

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<v Speaker 1>Whose idea was that.

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<v Speaker 2>Look, I mean, we do have an articles of agreement

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<v Speaker 2>and they say you have to have regular consultations. The

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<v Speaker 2>Russian case is a very complex case. This is not

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<v Speaker 2>your normal article for so as you know, we have

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<v Speaker 2>said we need to see whether we have all the data,

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<v Speaker 2>we need to see whether we are ready, and at

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<v Speaker 2>this moment we are not.

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<v Speaker 1>What does that damage the Fund's reputation having that sort

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<v Speaker 1>of confusion around starting and then stopping.

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<v Speaker 2>I think that the Fund has been incredibly strong over

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<v Speaker 2>this period of time of shock upon shock upon shock.

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<v Speaker 2>We have supplied liquidity to countries that need it. We

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<v Speaker 2>boosted reserves for countries so they can go through these shocks.

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<v Speaker 2>And I think our reputation speaks for itself by the

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<v Speaker 2>fact that our membership is increasing. We just got our

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<v Speaker 2>one hundred ninety first member, the tiny country of Liechtenstein

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<v Speaker 2>joining us. Why because we are an anchor in a

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<v Speaker 2>sea of trouble. So I would argue that when you

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<v Speaker 2>look at the Fund, you have a credible institution. We

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<v Speaker 2>have come true. We help the world economy to steer

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<v Speaker 2>through very difficult times. We will continue to do that.

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<v Speaker 3>But is it tricky considering the war and in terms

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<v Speaker 3>of advising Russia, like how to survive through this when

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<v Speaker 3>most of the developed world, as you.

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<v Speaker 2>Know, of course, cities as a horrible war. My heart

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<v Speaker 2>bleeds for the people in Ukraine that have been so

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<v Speaker 2>harshly hit by Russia's war. I want to see the

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<v Speaker 2>war ending for the sake of Ukraine and for the

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<v Speaker 2>sake of the global economy. It was incredibly damaging to

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<v Speaker 2>the whole world. When we think of this is it

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<v Speaker 2>is it possible to do Article four without enhancing Russia's capabilities?

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<v Speaker 2>We have to sit back and think twice. And this

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<v Speaker 2>is what you're doing right now?

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<v Speaker 1>How long will you wait before that is?

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<v Speaker 2>And why are some of our members, I mean, this

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<v Speaker 2>is our the levels. Some of our members are saying,

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<v Speaker 2>please if you're you're the only institution no treasure. Other

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<v Speaker 2>members they're saying, you're the only institution that can come

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<v Speaker 2>up with some credible assessment what is happening in Russia.

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<v Speaker 2>So that is also something that is in the equation.

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<v Speaker 2>But I'm telling you this is not an venture we

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<v Speaker 2>would take ever lightly. And I care very deeply for

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<v Speaker 2>the trust of my membership. We need to be there

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<v Speaker 2>as an institution that holds strong in a world that

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<v Speaker 2>has more trouble.

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<v Speaker 3>I want to ask you about Argentina because you guys

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<v Speaker 3>have put in there are some complaints by the Argentinian

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<v Speaker 3>president about the IMAF negotiator. You put in a new negotiator,

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<v Speaker 3>and we do wonder about, like what does that signal

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<v Speaker 3>to other countries when they're maybe not happy with negotiations

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<v Speaker 3>or policies.

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<v Speaker 2>Or the IMASS So the answer is very simple. It

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<v Speaker 2>is the negotiator himself who found the situation being propagated. Yeah,

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<v Speaker 2>how do you negotiate with somebody who does not trust

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<v Speaker 2>you at all? So it was that negotiator that looked

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<v Speaker 2>into the situation in Argentina. That's Argenta in a needs

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<v Speaker 2>help from the fund? Yes, do they need our advice? Yes,

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<v Speaker 2>well let me send somebody who the president would listen to.

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<v Speaker 2>And I can tell you that that was a mature judgment.

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<v Speaker 2>And I stand by this judgment of my staffer, great professional,

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<v Speaker 2>great professional, Rodrigo Valdez. I admire him for the maturity

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<v Speaker 2>it has shown in that environment.

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<v Speaker 1>And are you hopeful for improved relationships with Argentina as

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<v Speaker 1>a result of that change? Will things proceed more smoothly

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<v Speaker 1>with the IMF relationship there Argentina?

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<v Speaker 2>Argentina faces very very tough problems to solve, and I

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<v Speaker 2>know that Argentina would only benefit of having the IMF

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<v Speaker 2>analytically to stand by Argentina and financially to stand by Argentina.

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<v Speaker 2>And I'm r.

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<v Speaker 3>I don't know if you realize it, but there's an

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<v Speaker 3>election going on in the United States and I am

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<v Speaker 3>I am curious. You've got two candidates with radically different

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<v Speaker 3>positions on a lot of different issues, whether it's trade, immigration,

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<v Speaker 3>the US's position on the global stage on economic policy.

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<v Speaker 3>What's your advice for the next president of the United States.

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<v Speaker 2>Look, I mean the elections in the United States. This

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<v Speaker 2>is the choice of the American people. They make this choice,

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<v Speaker 2>they have a president, and then this president sets up

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<v Speaker 2>an agenda for the country. We are always there for

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<v Speaker 2>our members to give them our best shot advice.

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<v Speaker 3>So you remembers worried about the outcome of the US election.

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<v Speaker 2>The whole of the membership is now facing a work

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<v Speaker 2>in which sixty percent of people are going to the pulse. Yeah,

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<v Speaker 2>you ask different countries. They have different worries, but are

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<v Speaker 2>also very amazing stories that I hope you would tell.

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<v Speaker 2>I was with Professor Hunise of Bangladesh. Here is a

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<v Speaker 2>country in which the youth of the country said, no

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<v Speaker 2>more corruption. We want to turn a page. And for

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<v Speaker 2>us supporting this country to turn that page to get

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<v Speaker 2>a good growth and good prospects for their people. Amazing.

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<v Speaker 3>So listening to the younger population always important. Chris Allni Giorgava,

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<v Speaker 3>thank you so much. We so appreciate your time here.

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<v Speaker 3>Managing Director of course at the International Monetary fun Thank

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<v Speaker 3>you so much, my pleasure