Singapore – IMF: Energy prices may stay high even if the conflict ends

SINGAPORE, Oct 7 /ATSH-DPA/ – High energy prices, driven by the war with Iran, are likely to continue for a longer period, the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, warned today.

“Price pressures could rise further as energy demand increases with the approach of the cold season in the northern hemisphere and as states seek to replenish their fuel reserves,” Georgieva said in a prepared speech at an event in Singapore, ahead of the annual meetings of the IMF and the World Bank.

She said that even if the war ends soon, high energy prices could continue for some time. According to her, Brent oil futures contracts show that markets expect oil prices to remain high until 2027.

The annual meetings of the IMF and the World Bank are expected to start next week in Bangkok.

Georgieva warned that the difficult situation in energy markets and the rapid growth of the artificial intelligence (AI) sector are adding pressure on prices.

Customs tariffs, increased defence spending and high levels of public debt could also cause further rises in inflation.

“This could be an appropriate moment for many countries to pursue a more cautious monetary policy, more oriented toward curbing inflation,” Georgieva said.

She praised the U.S. Federal Reserve, the European Central Bank and the Bank of Japan, which have already raised their key interest rates.

At the same time, Georgieva criticised the spending and budget policies pursued so far by some developed economies.

Rising interest rates are also making short-term interest rates higher, making borrowing more expensive.

Despite the large increase in public debt across the world, she said developed countries with high debts are not taking sufficient measures to reduce it.

According to her, credible plans are urgently needed for the gradual reduction of debt and control of public spending in the coming years. /