IMF Cuts U.S. Growth Forecast, Urges ‘Very Gradual’ Rate Hikes
Source: Bloomberg
The International Monetary Fund cut its forecast for U.S. growth this year, urging the Federal Reserve to lean toward modestly overshooting its inflation target in considering whether the economy can handle higher interest rates.
The IMF said the U.S. economy will grow 2.2 percent this year, less than its projection of 2.4 percent in April. The fund left unchanged its forecast for a 2.5 percent expansion in 2017.
Theres a clear case for the Fed to proceed on a "very gradual" path in raising its benchmark rate, the IMF said in a statement Wednesday after concluding its annual assessment of the worlds biggest economy.
The path for policy rates should accept some modest, temporary overshooting of the Feds inflation goal to allow inflation to approach the Feds 2 percent medium-term target from above, the fund said.
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