Daily Management Review

IMF warns Fed Reserve to not go for rate increase


06/04/2015


In a setback to investors and market enthusiasts, the IMF has downgraded the GDP estimate for US this year and advised the Federal Reserve to not increase the rates until the first half of 2016.



IMF warns Fed Reserve to not go for rate increase
The International Monetary Fund has given a red herring to the US economy. The international watchdog has asked US Federal Reserve to hold off the impending rate increase until 2016.
 
US has been rallying for the rate increase which would have been the first in a decade and signals the boost that the country’s economy had been facing lately. To make the matter graver, IMF has even slashed the forecasts for US economic growth. The watchdog noted a series of attributes including a strong dollar and bad weather as bringing down the country’s job creation rate. IMF has now brought US GDP growth to 2.5 per cent for the year when compared to the last estimate in April for a 3.1 per cent expansion.
 
According to IMF report, the lull in oil prices has decreased investment in the sector in the first quarter of the year. Adding to the woes is the strike in West Coast ports. Considering these factors, the fund has asked for caution till the first half of 2016 in the matter of rate increase. The fund also said the dollar is already “moderately overvalued” and any more appreciation could in fact be detrimental to the US economy.
 
The set of recommendations from IMF to strengthen the economy include enhancing the Financial Stability Oversight Committee and the way it manages risks. Meanwhile, the rate increase by Federal Reserve could mean “significant and abrupt rebalancing of international portfolios with market volatility and financial stability.”  The country could face an inflation which will shoot up borrowing costs. Another reason for worry for the IMF is the extent of ripple effect which would be fekt by countries with strong economic ties with the US.
 
The IMF did not leave the opportunity to once again bring to light the inability of Congress and White House to set a clear cut federal budget, which could increase the risk of a government shutdown as witnessed a year ago.
 
The IMF also signaled at risks growing in the insurance and money markets. Investors have been putting dollars into riskier assets in the search for higher returns due to the conducive market environment.
 
 






Science & Technology

With China Set To Dominate, 1 Billion Could Be Using 5G By 2023

Deutsche Telekom unveils next gen 5G mobile antennas in Europe

Diamonds are now the new gold

Expert Body Says Driving In A Driverless Car In An Inebriated Condition Or On Drugs Should Be Legalized

SEC’s EDGAR database vulnerable to cyber threats

Research Says The Risk Of Severe Turbulence On Planes Will Increase Due To Climate Change

Barclays and CLS Group aim to replace SWIFT with blockchain

Designing Of Cars Being Done With Hologram Goggles At Ford

The Already Surging Cyber Attacks Are Set To Rise Even Further, Says A Study

Chinese to equip smartphones with OLED displays

World Politics

World & Politics

Scholar Says Political Appointees Not As Important As Financial Ones In China For The Economy

An Expected Change In Brussels Could Be Crucial For The Euro Zone

Destroying People Who Wouldn't Help One Of His Bankrupt Businesses Was All Trump Talked About When He Met Him In 1990s: Branson

Russia Is Worried About America’s Unpredictability

No oil contracts with Iraqi Kurdistan: Iraq’s oil ministry

Donald Trump lost $ 600 million during his presidency

Britain puts its weight behind Europe in the battle between Boeing and Bombardier

EU hopes to keep the Iran nuclear deal afloat