Istanbul
International Monetary Fund (IMF) Managing Director Kristalina Georgieva said on Thursday that the U.S. Federal Reserve should keep interest rates on hold until the second half of the year.
He said that given significant upside risks, the Fed should keep rates at current levels “at least through the second half of 2024.”
Geogieva said the U.S. economy was supported by “increasing labor supply and productivity” during the Fed's unprecedentedly aggressive tightening cycle in recent years.
“I want to recognize that the lesson we've learned over the past few years is that we're in more uncertain times,” she said at a news conference. “This uncertainty is going to continue.”
“But we're confident the Fed will get through it and navigate it with the same prudence it has shown over the past year,” he added.
The IMF also released a U.S. staff summary statement on the 2024 Article IV consultation mission on Thursday.
The statement said the U.S. economy has proven strong, dynamic, and able to adapt to changing global conditions, economic activity and employment continue to exceed expectations, and the costs of deflation have been significantly less than many had feared.
But it added that the continued expansion of trade restrictions and the inadequate response to last year's bank failures both pose significant downside risks.
The statement added that “downside risks could arise from a complex global geopolitical environment or from a slowdown in deflation and a resulting rise in interest rates.”
“Despite the significant progress made so far in moving inflation back towards its 2 percent objective, the Federal Reserve should wait until at least the second half of 2024 to lower interest rates,” the report repeated Georgieva's remarks.
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