IMF says interest rates will fall once inflation is under control

The International Monetary Fund (IMF) has said that interest rates in major economies will fall once high inflation is brought under control.

According to its most recent forecast, interest rates will eventually return to pre-pandemic levels as a result of low productivity and ageing populations.

As it stands, the base interest rate in the UK, set by the Bank of England (BoE), is 4.25% and inflation is at 10.4%, remaining near a 40-year high.

Writing in a blog, the IMF said: “When inflation is brought back under control, advanced economies’ central banks are likely to ease monetary policy and bring real interest rates back towards pre-pandemic levels.”