December 9, 2023

MF Georgieva US Debt Ceiling Economy


The IMF sees the US avoiding recession, but inflation remaining above the Federal Reserve Bank’s 2% target this year and next, Managing Director Kristalina Georgieva told reporters Thursday in Washington, DC. 

“On the Q4-to-Q4 basis we expect the economy to grow by 1.2% this year and retain momentum into 2024. Unemployment, we see as rising slowly to get close to four and a half percent by 2024. Still a fairly strong labor market. Now this resilient demand and the strong labor market are something of a double-edged sword. They have been certainly a boost to American families, but they have also contributed to more persistent inflation that had been anticipated. We now expect core PC inflation to fall only slowly, ending this year at around 4%. And we see inflation remaining above the Fed’s medium-term target throughout 2024,” said Georgieva at a virtual news conference from IMF headquarters. 

Earlier in the day she met with US Treasury Secretary Janet Yellen and Fed Chair Jerome Powell. She said that they had discussed the impasse over raising the debt ceiling and impact on the global economy.

“We are very keen to see a resolution as soon as possible. And let’s remember, we are now in the 12th hour. So coming with a good outcome for the U.S. and for the world economy is paramount from a global perspective. We think of the U.S. Treasury market as an anchor for the global financial system, and this anchor needs to hold something solid. So at the time of of significant uncertainty, we do not let a self-inflicted injury to those that the world economy already suffers,” Georgieva said.

Failure to find a way to pass legislation raising the debt ceiling could lead to the first-ever default by the US as early as June, Treasury Secretary Janet Yellen has warned. This could lead to higher interest rates for sovereign debt, increasing pressure on countries already struggling with increased borrowing costs, the IMF has warned.

“If the threshold is passed, in other words, if we are in a territory where no resolution is found and the US has to trim down spending and it ultimately comes mid-month, the question of the US serving servicing its debt becomes very real. Then we are in uncharted territory.”

The IMF’s report also found that the Fed may need to hold interest rates higher for longer due to sustained consumer spending and historically low unemployment.

“Look, the the data we have gotten and actually this is being even confirmed today is that inflation remains stubbornly high, especially core PCE is telling us that that is the job is not quite yet done. We made an assessment on the basis of data. The Fed is somewhat below that assessment. But frankly, we need to continue to follow the data and see how much it would take to bring inflation to a target and how long it would take to bring inflation to target.”

A full copy of the US Article IV concluding statement can be found here: United States of America: Staff Concluding Statement of the 2023 Article IV Mission (

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