The World Bank warned that global commodity prices are stabilizing at a level that is still too high, which may damage the prospects for major central banks to cut interest rates rapidly.
The Zhitong Finance App learned that the World Bank warned that global commodity prices have stabilized at a level that is still too high, which may damage the prospects for major central banks to cut interest rates rapidly.
According to a report released by the World Bank on Thursday, commodity prices have remained largely unchanged after plummeting nearly 40% from mid-2022 to mid-2023. The agency said that further escalation of the Middle East conflict may drive up costs, but global commodity prices are expected to fall 3% this year and 4% in 2025.
According to the report, this will make prices higher than most central banks' inflation targets, about 38% higher than the five-year average before the COVID-19 pandemic.
Indermit Gill, the World Bank's chief economist, said at a press conference: “The key force to curb inflation — falling commodity prices — has actually hit a wall. This means that interest rates for this year and next are likely to be higher than currently anticipated. The world is at a moment of fragility: a major energy shock could disrupt much of the progress made in reducing inflation over the past two years.”
The average price of Brent crude oil, the global benchmark, is expected to reach $84 per barrel in 2024. The report said that if the Middle East conflict escalates, “more serious” supply disruptions could push oil prices above $100 per barrel.
The cost of key metals (including copper and aluminum) used in the global clean energy transition is also expected to rise this year.