IMF: battle against inflation is almost won

According to the International Monetary Fund (IMF), the global battle against inflation is almost won. Inflation should return to normal levels towards the end of next year. The IMF does warn about reduced economic growth and an increase in economic inequality.

Inflation has been defeated

“The battle against inflation is almost won. After peaking at 9.4% in the third quarter of 2022, we now expect a decline to 3.5% by the end of next year,” said Pierre-Olivier Gourinchas, the IMF’s chief economist.

Funny enough, Gourinchas makes those statements at a time when many analysts are worried about a second wave of inflation.

The global economy is doing well and inflation still appears to be falling. This increases the chance of a soft landing, that is the scenario in which inflation falls to the desired 2.0% and the economy remains afloat.

But the downside of a strong economy is of course that there is also a chance that inflation will pick up again. It would not be the first time that an authority like the IMF has spoken out about inflation in this way, and then we see a different scenario unfold.

Good for Bitcoin

If inflation does indeed fall to the levels discussed by Gourinchas and the global economy continues to grow, then that would be a positive development for the Bitcoin price.

A soft landing for the global economy will significantly stimulate the financial markets. Especially now that central banks are lowering interest rates en masse. Only a severe recession can throw a spanner in the works of a continuation of the overall bull market for risk assets, or so it seems.

Yet, according to the IMF, it is alarming that a large part of the global economy is showing substandard growth.

There is sub-standard growth in many Western economies in particular. The IMF even speaks of the “weak growth of recent decades.”