According to the final Davos panel of 2025, global inflation has not yet ended and advanced economies outside China may not be satisfied at a time of volatile consumers and trade tensions.
Veterans ranging from International Monetary Fund chief Kristalina Georgieva to BlackRock CEO Larry Fink acknowledged that, despite all the efforts of central banks to control consumer prices, policymakers could not afford to take their eye off the ball. Can.
“Most of the genie is in the bottle, kind of stuck there,” the IMF managing director said. “But the legs are still hanging out. “We need to push it down every step of the way.”
The comments added to concerns repeatedly aired in and around the World Economic Forum over the past week, a period that coincided with the first four days of Donald Trump’s new term. While his arrival as US President excited finance officials, it left global economists and central bankers at large worried over the potential fiscal, inflation or growth outcomes.
This is in contrast to the cautious optimism displayed during last year’s Davos finale, where participants expressed trepidation at the prospect of a Trump return but wondered whether the global inflation shock might ease. Fink isn’t convinced.
“I believe the bond market is signaling that inflation may be higher than we think,” he said Friday. “Maybe the genie is coming out of the bottle.”
Market estimates of future inflation expectations have been rising for some time. The 10-year US breakeven rate, the difference between inflation-linked and nominal yields of the same maturity and a proxy for the average rate of price growth over the period, has risen about 50 basis points since September to about 2.50%. The inflation rate has also increased.
Singapore President Tharman Shanmugaratnam, a veteran economist and former finance minister of his country, who was also on the panel, noted the long-term backdrop that has led to rising consumer prices.
“Central banks and fiscal authorities have made mistakes over the last 15 years that have set us up for somewhat higher levels of inflation over the medium term,” he said.
The emphasis at Davos was slightly different from the IMF’s emphasis a week earlier. It upgraded its global growth forecast for this year on stronger-than-expected US demand and softening inflation around the world, and said the backdrop should see central banks continue to cut borrowing costs.
Concerns remain about consumer prices throughout the week. As the forum began, former Swiss central bank chief Philipp Hildebrand – a vice-chairman of BlackRock – worried that inflation could be “stubbornly sticky” and predicted “not many, if any” US rate cuts. . Ken Rogoff, once chief economist of the IMF, said that “the chances of an increase are as good as the chances of a cut.”
This is not an approach Trump is likely to welcome. Speaking via video on stage Thursday, he pledged the largest tax cut in US history, made repeated threats of tariffs, called on Saudi Arabia and OPEC to “bring down the price of oil”, and said that When that happens, “I and we will demand that interest rates be lowered immediately.”
Saudi Arabia’s economy chief, Faisal Alibrahim, did not budge on that demand while speaking on the panel. Meanwhile Fink, though perhaps less hawkish than Hildebrand or Rogoff, said the outlook doesn’t promise much in the way of easing from the Fed.
