The International Monetary Fund has urged the Federal Reserve to wait until next year to raise interest rates, cautioning that the US central bank’s credibility was at stake and that there was too much uncertainty to justify a much-anticipated lift-off.
The IMF said the US economy should expand 2.5 per cent this year despite a contraction in the first quarter, adding that “the underpinnings for continued growth and job creation remain in place”. However, it warned that conditions were still not right for the Fed to raise rates for the first time in almost a decade and that it ought to be mindful of the consequences for the rest of the world.
“We believe that a rate hike would be better off in early 2016,” managing director Christine Lagarde said.