IMF Urges Caution and Debt Reduction for U.S. Economy

The International Monetary Fund (IMF) continues to support the Federal Reserve's data-dependent, cautious approach to monetary policy and estimates that the Fed could cut interest rates later this year. The IMF also urges the United States to address its high fiscal deficit and forecasted rising net interest payments on federal debt.

The International Monetary Fund (IMF) has reiterated its belief that the Federal Reserve could initiate interest rate cuts later this year while maintaining a cautious stance. This follows a fall in U.S. June consumer prices.

IMF spokesperson Julie Kozack highlighted that the disinflation process is ongoing in the U.S., but emphasized the importance of fiscal responsibility, noting the country's strong economic growth fueled by federal spending on COVID-19 relief and investments in infrastructure, clean energy, and semiconductors.

Kozack also stressed the urgency of addressing the U.S.'s growing debt pile, pointing out that net interest payments on federal debt are projected to rise significantly due to higher interest rates and that fiscal measures are essential to put the debt-to-GDP ratio on a downward path.

(With inputs from agencies.)