IMF: Weak growth will drag down interest rates

Return to pre-pandemic levels

Interest rates are likely to return toward pre-pandemic levels once inflation is tamed due to chronic poor growth in the developed world, the International Monetary Fund has said.

Although this would be welcome relief to mortgage holders after months of quickly rising rates, the prediction is, however, based on a gloomy outlook of low productivity and ageing populations. Lower borrowing costs would likely help Rishi Sunak make his case ahead of an election next year, but the IMF's expectations of weak growth would threaten any attempts by the prime minister to cut taxes. Since December 2021, the Bank of England has raised rates from 0.1% to 4.25% in an aggressive attempt to dampen the worst inflationary pressures since the early 1980s. IMF: Better risk manag...