IMF chief concerned about high Japan and U.S. long-term rates

Washington – International Monetary Fund Managing Director Kristalina Georgieva expressed concern over soaring long-term interest rates in Japan and the United States in a speech in Singapore on Wednesday.

Georgieva described recent interest rate hikes by the central banks in Japan, the United States and Europe as “highly appropriate” in the speech ahead of the annual meetings of the IMF and the World Bank Group to be held in Bangkok next week.

The IMF chief voiced concern that the 10-year Japanese government bond yield has reached its highest level in about 30 years and the U.S. 10-year Treasury yield has hit its highest level in about 19 years, and that both are “still climbing.”

She noted that deteriorating fiscal conditions and ballooning public debt could affect the global economy, arguing that “the situation demands an urgent and comprehensive set of policy responses.”

Georgieva said that the global energy price shock stemming from turmoil in the Middle East is “large but contained.” She warned that an investment boom linked to artificial intelligence and rising resource prices were fueling inflation.

“Now may be a good time for a prudently hawkish bias in many countries’ monetary policy,” she said.

Amid growing concerns over AI’s rapidly advancing capabilities, Georgieva called for regulatory guardrails to manage “AI’s substantial perils” and reap the benefits of the technology.

“IMF research suggests that AI, if done right, could over time deliver up to half a percentage point of extra world growth annually,” she said, urging global cooperation.