Credit: IMF urges Fed to let inflation overshoot
The forecast for growth this year was cut to 2.2% from 2.4%. The 2017 forecast was left unchanged at 2.5%. The latest Fed forecasts are for 2.0% in 2016 and 2017.
"The path for policy rates should accept some modest, temporary overshooting of the Fed's inflation goal to allow inflation to approach the Fed's 2 percent medium-term target from above," the IMF writes.
On the US dollar, they said it was overvalued by 10-20% with forecasts to show the current-account deficit will rise above 4% of GDP by 2020.
As for recommendations, here's the quick list:
- Infrastructure spending
- Boost the earned-income tax credit
- Boost minimum wage
- Improve labor market participation
- Eliminate corporate tax loopholes
- Cut the overall corporate tax rate
"The near-term U.S. growth prospects are good despite the recent temporary setbacks," Lagarde said in a statement.
The IMF has consistently argued the Fed should be more dovish and the report says hikes should be "very gradual."
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
