Thursday 09/October/2025 – 12:42 AM
The Federal Reserve may cut interest rates again this year, but it will have to carefully balance deteriorating growth prospects with signs that the inflation slowdown has stalled, International Monetary Fund Director Kristalina Georgieva said.
Georgieva said in statements reported by Reuters that the US economy proved strong and exceeded most expectations with its growth in the second quarter by 3.8%, and that consumer demand remains strong despite indicators that show that employment is not as strong.
Georgieva added in an interview on Wednesday: It is a very unclear picture, so, in this environment, given that the inflation slowdown has stopped and that the economy may be a little weak as well, it is very important that the Federal Reserve does the right thing.
Reducing interest rates
The US Federal Reserve cut interest rates by a quarter of a percentage point at its meeting in September, a move that Chairman Jerome Powell and others described as a way to keep policy tight enough to rein in the economy and put downward pressure on inflation, while providing a more flexible policy that could help insure against rapid labor market weakness.
She said that consumers have not yet felt the full impact of US President Donald Trump’s imposition of high tariffs because companies had increased their inventories before raising the tariffs, noting that some companies with large profit margins are bearing the cost.
She added that Trump’s hike in tariffs comes after decades of very low tariffs in the United States and moves taken by other countries about a decade ago to reduce their duties.
Regional integration in trade
Trump’s change in that equation has transformed the global economy into a truly multipolar one, as many countries are now exploring opportunities to cooperate with regional partners or sign multilateral agreements with other regions.
This new world will likely continue as is, she said.
She continued: I do not think we will return to the world that we had, if you want to describe it, before the Covid-19 pandemic, before all these shocks came and hit us.. I see huge potential in places like ASEAN, like the Gulf, and some areas in Africa where there are strong economies, to move in this direction towards greater regional integration in trade and financial services, and I think that this is a good thing.
