Fed urged to delay rate hike
The International Monetary Fund urged the Federal Reserve to wait until the first half of 2016 to start raising short-term interest rates because the U.S. economy remains subpar.
In its annual checkup of the U.S. economy released Thursday, the IMF said “the underpinnings for continued growth and job creation remain in place.” But America’s “momentum was sapped in recent months by a series of negative shocks,” including a harsh winter and a strong dollar that hurts U.S. exports.
The IMF predicted the U.S. economy would grow 2.5% this year, down from its April forecast of 3.1%.
It said the Fed should wait for more signs of improvement — specifically “greater signs of wage or price inf lation.” The central bank has kept its benchmark rate at a record low near zero since December 2008.
Barring unexpected good news, the IMF said the Fed should probably hold off raising rates until next year.
Many private economists, however, speculate that the Fed will start raising rates in September.