IMF warns on the impact of high bond yields

The International Monetary Fund (IMF) warned in a report on October 27, 2023 that high bond yields could lead to a global recession. The IMF said that rising interest rates could lead to a decline in investment and consumer spending.

The IMF’s warning comes as the Federal Reserve has been raising interest rates in an effort to combat inflation. The Fed has raised rates by 0.75 percentage points at each of its last three meetings, and it is expected to continue raising rates in the coming months.

The IMF said that high bond yields could have a number of negative consequences for the global economy. These consequences include:

* A decline in investment, as businesses become more reluctant to borrow money to invest in new projects.* A decline in consumer spending, as consumers become more reluctant to borrow money to buy goods and services.* A slowdown in economic growth, as businesses and consumers spend less money.

The IMF said that the impact of high bond yields could be particularly severe in emerging market economies, which are more reliant on foreign investment than developed economies.

The IMF’s warning is a reminder of the risks associated with rising interest rates. While the Fed is raising rates in an effort to combat inflation, it is important to do so in a way that does not slow the economy too much.