International Monetary Fund: The budget deficit carries risks for the global economy

United States – The International Monetary Fund has warned that the huge US budget deficit is fueling inflation and poses “significant risks” to the global economy.

This came according to a report issued by the International Foundation, and it is expected that the US budget deficit will reach 7.1% next year, more than 3 times the levels of budget deficits in other advanced economies.

According to the report, the US deficit contributed to an increase in core inflation by 0.5%, that is, an increase in the inflation index without taking into account the prices of energy resources and their products.

The Fund noted the need for interest rates in the United States to remain at a high level for a longer period so that inflation can return to the target level of 2%.

Earlier, the chief economist of the International Monetary Fund, Pierre-Olivier Gurinchas, said that the financial situation of the United States “raises particular concern,” as it “creates short-term risks to the process of slowing inflation and long-term risks to the financial and tax stability of the global economy.”

Data issued by the Treasury Department, earlier this month, revealed that the US budget deficit exceeded one trillion dollars in the first six months of the fiscal year, partly paid for by the rise in interest on public debt.

Source: “Financial Times”