High inflation causing tension between monetary and fiscal policy: Gopinath

On what needs to change, she said for the countries to manage such a difficult trade-off right, fiscal policy has to play a role

The global economy is facing a unique situation due to unprecedented level of high inflation and that is causing tension between monetary and fiscal policies, IMF's Gita Gopinath said on Wednesday.

Speaking at a session during the World Economic Forum Annual Meeting 2023 here, the first Deputy Managing Director of the International Monetary Fund (IMF) said we have the kinds of inflation that we have never seen.

"It's coming down, but it's still high. That is what is generating the tension between monetary policy and fiscal policy..."
"If you look at what happened to the public sector debt globally in 2020, it went up to around 99 per cent of GDP. Now it has come down to around 91 per cent of the GDP. That is because of a combination of the recovery and also because of inflation inflating away some of that debt."