Interest rates should become more "neutral" if there is a strong economic recovery in the United States and Europe and this would be a positive sign, new IMF chief Rodrigo Rato said on Thursday.
Rato, elected as new managing director of the International Monetary Fund (IMF) this week, also said he did not think that high oil prices would seriously affect Europe's recovery.
"Rates have been and still are very soft in the United States, and in large part, in Europe," Rato said in an interview on Cadena Ser Spanish radio station.
"If there is - and in the case of the United States it seems there is no doubt - a strong recovery, rates should return to a greater neutrality and that guarantees that we won't have problems in the future," he said in a clear indication he sees higher rates ahead.
"Normalising the interest rate situation by going to more neutral situations is a positive sign because it indicates the economy is improving," he said.
"I don't see big inflation risks."
Rato said that in the last two years the oil price had been constantly above expectations.
"Apart from specific questions such as the problem of inventories in the United States or Iraq's ability to join the international market, I think there's an energy problem of growing consumption in the world. Spain is a good example of this, but also Europe," he said.
Large emerging economies such as China and India were having significant beneficial effects on the world economy, but were also contributing to higher demand for oil, he said.
Asked if the high oil price could affect European economic recovery, he said: "I don't think it will seriously."
Comments
Comments are closed.