The prescriptions came in the detailed staff report from the IMF’s annual “Article IV” review of U.S. economic policies released on Thursday. The Fund has been emphasizing in recent weeks the need for more fiscal prudence as U.S. deficits continue to grow despite robust economic growth and as Republicans and Democrats formulate tax and spending proposals ahead of November’s presidential election.
IMF Chief Economist Pierre-Olivier Gourinchas told Reuters on Tuesday that the Fed could afford to wait longer to start easing monetary policy due to a strong labor market. But the staff report specifies that this shift should come in “late 2024,” to avoid more upside surprises in inflation data.
“Given salient upside risks to inflation — brought into stark relief by data outturns earlier this year — it would be prudent to lower the policy rate only after there is clearer evidence in the data that inflation is sustainably returning to the FOMC’s 2 percent goal.”
Source: Economy - investing.com
