The international institution downgraded its projections for global growth, following in the footsteps of the International Monetary Fund, which voiced similar worries. “Our worst-case scenario is now our baseline scenario,” a World Bank economist told the Financial Times.
A European Central Bank governor, meanwhile, said interest rates must “rise significantly at a steady pace” to quell inflation. European Central Bank Executive Board member Isabel Schnabel said borrowing costs must be lifted much further, with inflation only just having dipped back into single digits.
“Interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to our 2% medium-term target,” she said Tuesday.
The forecasts stand in stark contrast to hopes that the U.S. is experiencing a Goldilocks economic[1] moment and that China’s abandoning of zero-COVID measures could boost growth.
[1] A Goldilocks economy is not too hot or too cold but just right—to steal a line from the popular children's story Goldilocks and the Three Bears. The term describes an ideal state for an economic system. In this perfect state, there is full employment, economic stability, and stable growth.
