Just in case the economic masterminds over at the Fed needed another reason to continue dragging their heels on an interest rate hike, the far more insidious economic masterminds at the IMF have kindly requested the Fed hold off just a little longer.
Hiking interest rates too soon could stall the U.S. economy, the International Monetary Fund said Tuesday, embellishing a prior call for the Federal Reserve to hold steady until early next year.
The Fed should wait to move until it sees “clear signs of wage and price inflation,” the IMF said, which is “benign” at the moment. The IMF comments came from its annual report on the U.S. economy and an ensuing press conference.
“We feel there is space for them to wait,” said Nigel Chalk, the IMF’s U.S. mission chief, noting that inflation is far from the Fed’s 2% annual rate target. As measured by the personal consumption expenditure price index, the annual growth in inflation was just 0.2% in May.
The market has its money (no pun) on a rate hike in December of this year, which just goes to show how clueless the market can be.
Once again, we're back to the challenge of heating up the economy without setting that bitch on fire and burning it to the ground. What a conundrum for our friends at the Fed!
From the IMF:
Inflation pressures remain muted. In May headline and core personal consumption expenditure (PCE) inflation declined to 0.2 and 1.2 percent year on year, respectively. Long-term unemployment and high levels of part-time work both point to remaining employment slack, and wage indicators on the whole have shown only tepid growth. When combined with the dollar appreciation and cheaper energy costs, inflation is expected to rise slowly staring later in the year, reaching the Federal Reserve’s 2 percent medium-term objective by mid 2017.This is the second time in as many months that the IMF has warned the Fed to cool it on a possible rate hike, which seems alarmist considering the Fed's inaction thus far. And by "thus far" I mean "for the last 7 fucking years."
Calm your tits, IMF, it's not happening this year.