Associated Press (07/07/15) Ian Talley
The International Monetary Fund continues to encourage the U.S. Federal Reserve to delay its pending interest rate increase, noting that the central bank could stall the U.S. economy by raising its rates too early. IMF says that the central bank should delay the increase until 2016 because there is too much uncertainty around inflation, employment, and wages.
“Right now, we see inflation indicators actually declining in the [U.S.],” says IMF U.S. mission chief Nigel Chalk. “They’re still relatively far from the Fed’s medium-term goal of 2%.” IMF projects a lower inflation trajectory for this year and next, compared with that of Fed policymakers, and raising rates too early could trigger a stronger tightening of financial conditions beyond just a 0.25% increase, Chalk says.