The Deputy Chief Executive Officer of the International Monetary Fund warned about the complacency on lending levels in the global economy (IMF), Gitta Gopinath, saying that the markets Bonds are “in fragile state”.
“Debt levels are incredibly high, they are constantly increasing. While in the past, you may have believed that markets will simply accept it, this is no longer the case, even in advanced economies, “Gita Gopinath said today (28.8.25) in an interview with Bloomberg.
Gopinath, who is leaving the position of the second IMF official this week and returns to a post at Harvard University, pointed out signs of debt concern in the French and United Kingdom bond markets, as well as the long -term US.
Officers of France’s 30 -year bonds reached a high 14 -year -old one this week as investors expressed Concern about the country’s political difficulty in introducing a budget that Paris will set on the right track to achieve the target for the budget deficit. In Britain, yields of 30 years of government bonds have been close to higher levels since 1998, putting pressure on Prime Minister Kir Starmer to limit lending. Officials of 30 -year -old US bonds are well above average in recent years.
“The bond markets are in a fragile situation, the ratings on the stock markets are high – so I would say to move carefully,” Gopinath said.
Federal Bank’s independence
He warned that no one derives solace from the lack of financial crisis in recent years “despite the pandemic, despite the wars, despite the geo -economic fragmentation, despite the sharp increase in Fed interest rates”.
“We haven’t experienced a financial crisis – that doesn’t mean that will never happen,” he said.
Asked about the perceived threats to the Federal Bank’s independence, Gopinath pointed out the lack of reactions in the markets this week as an indication that investors are still considering the US central bank autonomous. At the same time, he considered that “everyone is in a state of waiting”.
President Donald Trump earlier in the week proceeded to remove Fed Commander Lisa Cook triggering concerns about a wider government’s initiative to reform Fed leadership and promote interest rates.
“Everyone must still believe that independence, in particular functional independence, in terms of setting monetary policy interest rates, will be maintained,” Gopinath said, referring to the relative tranquility of the market. “I think there is more about which we have to worry about what the markets show right now. But again, we have to wait and see. “