IMF Advises Fed to Delay Rate Cuts and US to Raise Taxes
The International Monetary Fund (IMF) advises the U.S. Federal Reserve to delay interest rate cuts until late 2024 and suggests the government raise taxes to curb the increasing federal debt. These recommendations are part of the IMF's Article IV review, released amidst ongoing robust economic growth and political discussions on fiscal policies.
![IMF Advises Fed to Delay Rate Cuts and US to Raise Taxes](https://devdiscourse.blob.core.windows.net/aiimagegallery/31_05_2024_21_40_36_5427452.png)
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- United States
The International Monetary Fund (IMF) on Thursday recommended that the U.S. Federal Reserve should not cut interest rates until "late 2024" and urged the government to increase taxes to slow the rising federal debt. The recommendations were part of a detailed staff report from the IMF's annual "Article IV" review of U.S. economic policies released on Thursday. These suggestions come as U.S. deficits continue to grow despite robust economic growth and as Republicans and Democrats draft tax and spending proposals ahead of the November presidential election.
IMF Chief Economist Pierre-Olivier Gourinchas told Reuters on Tuesday that the Federal Reserve could afford to delay easing monetary policy due to a strong labor market. However, the staff report recommends that the shift should occur in "late 2024" to avoid further inflation surprises. "Given the significant upside risks to inflation, highlighted by recent data, it would be prudent to lower the policy rate only when there is clearer evidence that inflation is sustainably returning to the Federal Open Market Committee's (FOMC) 2 percent goal."
(With inputs from agencies.)
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