WASHINGTON, Oct. 22 (.) – The International Monetary Fund (IMF) announced on Tuesday that it expects the US Federal Reserve (Fed) to cut interest rates twice in 2024 and four times in 2025. attributed this to a decline in inflation in 2024. country.
“Why do we think that? Because inflation is rising,” the economist said at a press conference. “Right now, the Fed’s concern is making sure that the last part of this process doesn’t impact economic activity. That’s true.” IMF President Pierre-Olivier Grinchat.
The business organization released its World Economic Outlook (WEO) report on Tuesday this week, improving its forecast for the US by two-tenths to 2.8% in 2024 and 10% in 2025 compared to July calculations. It improved by three times to 2.2%.
Mr Grinchas stressed that the fight against inflation was “almost over”. It was 4.1% in 2023, but is expected to fall to 3% in 2024, and is expected to reach 1.9% in 2025, slightly below the target of 2%.
The Fed began its rate cutting cycle at its mid-September meeting, cutting aggressively by half a percentage point to keep interest rates in the 4.75% to 5% range. In his economic outlook, he suggested at the November 6th and 7th meeting, or the last meeting of the year on December 17th and 18th, that there could be further declines this year.
At the end of the same month, Fed Chairman Jerome Powell deemed it unnecessary to further cool labor market conditions to reach the 2% inflation target.
The IMF’s chief economist acknowledged that the Fed needs to focus on ensuring that inflation does not negatively impact economic activity as the labor market appears to be cooling.
But his prognosis for the country was good. “This strong growth occurred in a context of continued disinflation,” he said.
He also noted that although there were “obstacles along the way,” these gains were not seen in other developed countries.
Grinchas emphasized that the U.S. labor market is “quite strong, even though it’s cooled.”
The unemployment rate in 2023 is expected to be 3.6%, rising to 4.1% this year and 4.4% next year.
“The increase in unemployment that we have seen recently largely reflects the fact that there is an increase in foreign-born workers. They are rapidly integrating into the labor force, but there is still an influx,” he said. I concluded.
