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IMF chief Georgieva sees fiscal risks, need for central banks to be careful on rate cuts

BY Reuters | ECONOMIC | 10/25/24 02:15 PM EDT

WASHINGTON (Reuters) - Governments around the world need to rebuild fiscal capacity and central banks should think carefully about the timing of interest rate cuts, International Monetary Fund Managing Director Kristalina Georgieva said on Friday.

"In the short term, a focus on the fiscal side as an immediate priority. Fiscal buffers have been exhausted, yet fiscal pressures are high," Georgieva said in a press conference during the IMF and World Bank annual meetings in Washington.

Central banks need to "remain attentive, be evidence-based (and) carefully monitor data to make sure that they don't cut either too early or too late," she added.

(Reporting by Dave Lawder; Writing by David Milliken; Editing by Paul Simao)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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