IMF questions path of rapid rate cuts in persistent inflation environment
The International Monetary Fund (IMF) has tempered expectations for rapid interest rate cuts, warning of increased inflation risks that could extend the Federal Reserve's tightening cycle.
While recent data have shown a cooling of headline inflation, the IMF points out that underlying pressures, particularly in services and wages, remain persistent. This suggests that the path to lower inflation may be more arduous than expected.
The IMF's cautious stance contrasts with market sentiment, which has been leaning toward multiple rate cuts this year. However, the fund's chief economist, Pierre-Olivier Gourinchas, has indicated that a more gradual approach to monetary easing may be needed.
The U.S. economy is forecast to grow at a slower pace of 2.6% in 2024, as cooling consumer spending and a...