© Reuters. FILE PHOTO: The World Bank economist warned that high interest rates will likely last longer
World Bank chief economist Indermit Gill cautioned on Wednesday that historical data suggests that interest rates may continue to rise and are not expected to decrease “anytime soon,” which could have significant negative consequences for developing countries.
Gill expressed concerns about steep debt servicing costs, high debt burdens, and slowing growth in many countries, raising the possibility of a new debt crisis and the risk of contagion in the event of country defaults, although he stated that he does not see the risk as imminent.
He informed reporters that while inflation trends in advanced economies looked favorable, current shocks – particularly in commodities markets – could lead to a rapid rise in inflation, which may put pressure on central banks to maintain high interest rates.