International Monetary Fund (IMF) Managing Director Kristalina Georgieva speaks at the 2024 CNBC CEO Council Summit on June 4, 2024 in Washington, DC.
Shannon Finney | CNBC
The head of the International Monetary Fund (IMF) said the Federal Reserve should wait “at least” until the end of the year before cutting interest rates. The 190-nation organization said the United States was the only G20 economy growing faster than pre-pandemic levels, and that “strong” growth showed continued upward risks to inflation.
“We do recognize important upside risks,” IMF Managing Director Kristina Georgieva said at a news conference on Thursday. “Given these risks, we agree that the Fed should keep its policy rate Maintain at current levels, at least until the end of 2024.” Since July 2023, the Federal Reserve’s current federal funds rate has been maintained at 5.25%-5.50%.
International Monetary Fund, often called the World “Lender of Last Resort” The core personal consumption expenditures price index, the Fed’s preferred inflation gauge, is forecast to reach around 2.5% by the end of 2024 and reach the Fed’s 2% target rate by mid-2025, ahead of the Fed’s own forecast for 2026. predict.
Georgieva said that the strength of the U.S. economy during the Fed’s interest rate hike cycle was due to improvements in labor supply and productivity, while emphasizing the need for “clear evidence” that inflation will fall before the Fed cuts interest rates. 2% target.
Still, the IMF’s “more optimistic” assessment of inflation’s downward trajectory is based on signs of a cooling U.S. labor market and weakening consumer demand.
“I want to recognize that the lesson we’ve learned over the past (several years) is that we are in a more uncertain period. That uncertainty is coming. However, we are confident that the Fed will get through this. , and will definitely continue to work hard.
About The Author
