IMF Urges Fed to Maintain Interest Rates Until End of Year at the very least

At Extreme Investor Network, we aim to provide valuable insights and analysis to help you make informed decisions in the world of finance. Today, we are discussing the recent comments made by International Monetary Fund (IMF) Managing Director Kristalina Georgieva regarding the Federal Reserve’s interest rate policy.

Georgieva believes that the Federal Reserve should hold off on cutting interest rates until “at least” the end of the year. This recommendation comes as the U.S. remains the only G20 economy experiencing growth above pre-pandemic levels. The IMF notes that this robust growth indicates ongoing upside risks to inflation.

“We do recognize important upside risks,” Georgieva said during a press briefing. “Given those risks, we agree that the Fed should keep policy rates at current levels until at least late 2024.” The Fed’s current fed funds rate has been maintained at 5.25% to 5.50% since July 2023.

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The IMF’s forecast for the core personal consumption expenditures price index, the Fed’s preferred measure of inflation, predicts an end-of-year rate of around 2.5%, surpassing the Fed’s 2% target rate by mid-2025. Economic strength in the U.S. has been supported by labor supply and productivity gains, according to Georgieva, who emphasized the importance of clear evidence of inflation coming down before any rate cuts.

Despite the IMF’s optimistic assessment of the inflation trajectory, based on signs of a cooling labor market and weakening consumer demand, Georgieva acknowledges the prevailing uncertainty in the current economic landscape. However, she expresses confidence in the Fed’s ability to navigate through this uncertainty with prudence.

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At Extreme Investor Network, we understand the importance of staying informed about global economic developments and how they can impact your investment decisions. Stay tuned for more expert analysis and insights to help you navigate the ever-evolving world of finance.

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