BlackRock Inc. Vice Chairman Philipp Hildebrand said the International Monetary Fund should frame discussions this week around the new economic reality, where central banks are less able to support growth by cutting interest rates.

“We are going to be in a much more sticky inflation environment and rates will not be able to come down to respond to weakness,” Hildebrand said in an interview with Bloomberg TV on Monday. “That should be the framing of the IMF and I hope they start to pay attention to these new structural conditions.”

The IMF and World Bank are holding their annual meetings in Marrakech, Morocco, this week.

The market is already coming to terms with the fact that rates will stay high for longer, driving the yield on 30-year Treasuries last week to over 5%.

But a world where central banks are unable to smooth out business cycles would be a regime change. Investors have grown accustomed to support from policymakers, who for decades have resorted to easing financial conditions whenever economic activity slowed.

Central bankers will face tough trade-offs, hampered in part by supply constraints still plaguing the global economy, Hildebrand said. He also pointed to a geopolitical world order that is increasingly fragmented, and a risk premium that is “much higher” than in the past.

The escalating conflict between Israel and the militant group Hamas is “a manifestation of one of the longer-term forces on the supply side,” he said.

Oil surged, while haven assets including the dollar and the yen rallied on Monday, as markets tried to parse the impact of the violence. While markets are likely to remain jittery for a couple of days, they will eventually settle down, Hildebrand said.

“The risk premium around geopolitics is much higher than it has been in previous decades,” he said. The conflict is “yet another example of why we are likely to enter a much lower growth era.”

(Updates with additional comment in second paragraph.)