IMF chief warns of emerging market risk with high U.S. interest rates

High U.S. interest rates traditionally spell bad news for emerging markets, making their debts — which are often priced in U.S. dollars — more expensive.

International Monetary Fund Managing Director Kristalina Georgieva speaks during a briefing on the Global Policy Agenda at IMF headquarters during the IMF/World Bank Spring Meetings in Washington, DC on April 18, 2024.Kristalina Georgieva, the managing director of the International Monetary Fund, played down the prospect of any negative impact from a monetary policy divergence between Europe and the U.S., but said issues could be more acute in emerging markets.

A high U.S. interest rate environment is traditionally bad news for emerging markets, as it makes their debts — often priced in U.S. dollars — more expensive. It can also trigger capital outflows, as investors opt for better returns in the U.S., and can cause much tighter financial conditions.

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