The head of the World Bank thinks it might take years to get prices back under control as the U.S. and other economies face inflation rates not seen in decades. “It’s going to take months and months, and maybe two years to bring inflation back down,” said David Malpass recently. Record inflation and shortages of key commodities like oil, fertilizer, and wheat, mean “it’s going to be very hard” for some countries to avoid recession, Malpass said.
“A lot of the world is shutting down for lack of fertilizer. And then those shortages of crops will last for multiple years,” said Malpass, warning that food shortages might lead to “instability” in poorer countries. The U.S. recorded 8.6% inflation in May, a 40-year high, spurring the Federal Reserve to plan a series of aggressive interest rate hikes to bring prices back to a reasonable level. The Federal Reserve increased interest rates by 0.75 percentage points on June 15, its most aggressive hike in almost 30 years. The World Bank is concerned that interest rate hikes in advanced economies could drag down the world economy.
