Fed urged to de­lay rate hike

Los Angeles Times - - BUSINESS BEAT -

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.

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