From CNBC: 2024-06-27 16:28:43

International Monetary Fund (IMF) Managing Director Kristalina Georgieva urges the Federal Reserve to hold off on interest rate cuts until late 2024 due to strong U.S. economic growth. The IMF forecasts inflation reaching the Fed’s 2% target by mid-2025. Labor market cooling and weakening consumer demand contribute to optimistic inflation outlook.

IMF Managing Director Georgieva emphasizes the need for clear evidence of inflation decreasing before the Fed considers rate cuts. The IMF predicts core personal consumption expenditures rising to 2.5% by the end of 2024, exceeding the Fed’s target rate of 2% by mid-2025. U.S. economic strength during the Fed’s rate-hike cycle reflects labor supply and productivity gains.

The IMF regards the U.S. as the only G20 economy with growth surpassing pre-pandemic levels, highlighting “robust” growth and upside risks to inflation. The Fed’s fed funds rate has remained at 5.25% to 5.50% since July 2023. Georgieva expects the Fed to navigate uncertainty with prudence, maintaining economic stability.

Read more: IMF says Fed should hold interest rates until ‘at least’ end of year