The International Monetary Fund thinks US inflation will prove more stubborn, taking longer to fall back to target, because of the Iran war, according to its managing director Kristalina Georgieva.
Before the war, the IMF had projected that US headline inflation would return to the Federal Reserve’s 2% target by early next year. “Now that may be somewhat delayed,” Georgieva told CBS News in an interview that aired Sunday.
The war has accelerated a rise in US consumer prices. A war-driven jump in gas prices helped push US inflation to 3.3% in March, with prices rising at triple the pace seen in February, according to the latest Consumer Price Index report.
The Washington-based IMF will publish its latest World Economic Outlook Tuesday, providing an updated assessment of how the Iran war could affect prospects for the global economy.
The IMF will now downgrade its forecast for global economic growth, having projected a “small upgrade” before the war started, Georgieva told CBS, echoing her comments from Thursday. The size of the downgrade will depend on the duration of the conflict and how quickly oil and natural gas production can recover to its pre-war levels, she noted.
Last month, the Organisation for Economic Co-operation and Development kept its outlook for global economic growth this year unchanged from its previous forecast, at 2.9%. But it made a sharp upward revision to its outlook for inflation globally and in the United States.