The International Monetary Fund (IMF) has signalled that central banks may be forced to resume interest rate hikes if inflation surges again, as global risks intensify ahead of the IMF-World Bank Spring Meetings 2026 which begin today.

The warning comes as the escalating Middle East conflict threatens to trigger a fresh wave of inflation through energy supply disruptions; rising the likelihood of tighter monetary policy globally, including in economies like Ghana.

Speaking ahead of the meetings, IMF Managing Director Kristalina Georgieva cautioned that policymakers are facing a classic supply shock that could quickly spiral if not managed carefully.

“A word of caution upfront: this being a classic negative supply shock, demand adjustment is unavoidable.”

She stressed that while central banks may initially hold, they must be ready to act decisively if inflation expectations begin to drift. “For now, there is value in waiting and watching, with central banks stressing their commitment to price stability but otherwise staying on hold with a stronger bias to action if credibility is in question.”

However, she delivered a clear signal on the policy path if inflation worsens: “If inflation expectations threaten to break anchor and ignite a costly inflation spiral, then central banks should step in firmly with rate hikes. Rate hikes, of course, would further dampen growth. That’s how they work.”

The IMF’s stance underscores the delicate balancing act facing policymakers. Containing inflation without derailing growth as markets increasingly price in tighter financial conditions globally.