WASHINGTON (Reuters) -Central banks’ fight against inflation may take another two years to play out, increasing unemployment and lowering living standards for many in the world, the International Monetary Fund’s chief economist said on Tuesday.

FILE PHOTO: A man looks at a shop at the Ameyoko shopping district in Tokyo, Japan, May 20, 2022. REUTERS/Kim Kyung-Hoon/Files

In an interview with Reuters, IMF economic counselor Pierre-Olivier Gourinchas said that broad “core” inflation pressures beyond energy and food prices will take time to bring down to central bank targets of about 2%.

“Our projection is that this will start coming down, but we will not be back to central bank targets in 2023,” Gourinchas said of inflation. “We’ll be closer to that in 2024.”

In the meantime, unemployment will rise and living standards for many in the world will likely deteriorate, and some will find it difficult to find jobs, Gourinchas said.

The IMF earlier on Tuesday cut its 2023 growth forecasts to weak levels that would “feel like a recession” for many and warned that the risk of disorderly financial markets was rising. But it said policymakers should “stay the course” to beat back inflationary expectations.

“We’re still going to have inflation and the economy will have started slowing and so people will feel that, you know, it’s not a pleasant place to be,” Gourinchas said.

In the United States, the epicenter of the fight against inflation, Gourinchas said that the IMF is projecting that the unemployment rate will rise from an historic low level of 3.5% to about 5.5% over the next two years as growth slows in 2023 to a weak 1.0%.

That will result in more unemployed Americans and difficulty in finding new jobs — a marked shift from the current overheated labor market where there are two job openings for every unemployed worker, Gourinchas said.

But a two percentage point increase in the U.S. unemployment rate would be “a fairly benign outcome” in exchange for bringing inflation back to target, Gourinchas said, adding that the U.S. economy remains fragile and a lot of factors could tip it into a recession, including further energy price shocks and financial market disruptions.

Gourinchas, a French-born University of California, Berkeley, economist who joined the IMF in January, said it was important for central banks to “front-load” their tightening of monetary policy to “forcefully” fight inflation, which the Fed and some other central banks have done.

But he did not rule out a potential easing of the magnitude of further rate increases, noting that the Fed has already raised rates by 3 percentage points and is aiming for 4.5 points.

“The question of how quickly it gets there is maybe less relevant than the fact that it does get there and it sort of moves monetary policy in sufficiently neutral or even contractionary territory — that it can bring this price pressure down,” Gourinchas added.

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