The IMF sees a greater risk to the global economy if central banks start cutting interest rates too soon than if they move "a little" more slowly, managing director Kristalina Georgieva said on February 1.
The US Federal Reserve, the European Central Bank (ECB) and others have kept interest rates high in recent months in an effort to bring inflation back to targets following a post-pandemic surge in prices.
With inflation already falling in many of the world's advanced and emerging economies, attention is turning to when they should start cutting interest rates to boost investment and economic growth.
"Our team looked back at history and the conclusion it reached is that the risk of premature easing is higher than the risk of a slight slowdown," Georgieva told reporters during a briefing at the International Monetary Fund in Washington.
"But don't tighten it if you don't have to," she said. "So look at the data and act on it."
Georgieva's comments come a day after the US Fed's Interest Rate Setting Committee voted to keep interest rates steady. Fed Chairman Jerome Powell poured cold water on the idea of cutting interest rates at the next meeting in March - sending Wall Street stocks lower.
"I don't think it's likely that the committee will reach a level of confidence until the March meeting to designate March as the time to cut," he told reporters on Wednesday.
Earlier in the week, ECB President Christine Lagarde said policymakers there were confident a rate cut was coming, but did not commit to a specific date.
Georgieva told reporters that the United States is close to achieving a so-called "soft landing," when policymakers return inflation to target without triggering a recession.
"We are ready for a soft landing, but it is not done yet," she said. "You are still 50 feet above the ground and we know that it is not over until you land," Georgieva added./BGNES
