IMF Predicts Global Inflation To Fall To 3.5% By 2025

According to Cointelegraph, global inflation, which has impacted risk assets like cryptocurrencies and tech stocks, is expected to decline to 3.5% by the end of 2025, as stated by the International Monetary Fund (IMF) in its latest global outlook. The IMF's Chief Economist, Pierre-Olivier Gourinchas, highlighted that the battle against inflation is nearing its end. After peaking at 9.4% year-on-year in the third quarter of 2022, headline inflation is projected to fall to 3.5% by the end of next year. Gourinchas noted that inflation in most countries is now close to central bank targets, with the global economy showing resilience. Growth is projected to remain steady at 3.2% in 2024 and 2025. Lower inflation could lead to benefits such as decreased living costs and lower interest rates, potentially benefiting risk assets like cryptocurrencies. However, Gourinchas also pointed out that geopolitical and trade tensions in the Middle East, along with the upcoming Presidential election in the United States, create significant uncertainty. The IMF report called for a “policy triple pivot” to address interest rates, government spending, and productivity reforms. The report emphasized that a decline in inflation without triggering a global recession should be seen as a major achievement. Nonetheless, it acknowledged that the growth outlook for the global economy remains at its weakest level in decades. The IMF forecasted that the US is likely to experience the fastest growth rate, with strong expansions expected in emerging Asian economies due to robust investments in artificial intelligence. However, the outlook for other advanced economies, including several large European countries and some emerging markets, was lowered due to intensifying global conflicts and ongoing risks to commodity prices. The IMF warned that projected slowdowns in the largest emerging market and developing economies imply a longer path to closing income gaps between poor and rich countries, potentially exacerbating income inequality within economies. In contrast to the IMF's forecast, billionaire hedge fund manager Paul Tudor Jones expressed concerns about rising inflation. On Oct. 22, Jones stated he was long on Bitcoin, gold, and other commodities due to concerns over the US's growing debt. The Congressional Budget Office estimates a $1.9 trillion federal deficit for the 2024 fiscal year, projected to grow to $2.8 trillion by 2034. Jones suggested that inflating out of debt might be the strategy, citing Japan as an example. He warned that the US could face severe financial issues unless spending is addressed.