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IMF forecasts US economic growth of just 1.7% in 2023



Along with that, new data from the Personal Consumption Expenditures (PCE) Price Index showed inflation rising 4.4% year-on-year, raising the odds that the US Federal Reserve will raise interest rates again. .

he International Monetary Fund (IMF)based on the annual report “Article IV” prepared by the entity’s experts, The US economy is forecast to grow by just 1.7% indicating a slowdown of up to 1.2% heading into Q4.

Moreover, US GDP will only advance by 1% by 2024.

In this sense Bulgarian Kristalina Georgieva, Managing Director of the IMF stressed that so far the U.S. economy has proven to be “resilient,” especially in terms of consumer demand. “This is good news”.

again, The unemployment rate will rise “slightly” to 3.8% by the end of this year and 4.4% next year. .

“Even so, it’s going to be a pretty strong labor market,” Georgieva said, adding that while this has also contributed to entrenched inflation, it has “boosted” U.S. household incomes. added.

IMF Calls for ‘Prolonged Monetary Tightness’

Based on all of the above, in the opinion of experts, The US will be forced to maintain a ‘prolonged tight monetary policy’ inflation is projected to be 2.6% at the end of 2024, but only 2.8% is the underlying variable that excludes food and energy prices from the calculation due to their high volatility.

Both numbers beat the Fed’s target of holding inflation to 2% year-on-year. ”

“Inflation, especially core inflation, remains unbearably high, and it is clear that there is still much to be done,” he said.

In this sense, Georgieva emphasized: The IMF’s base case is for interest rates to remain “between 5.25% and 5.50% until the end of 2024.” .

New inflation data could push Fed to hike rates

during this friday Department of Commerce The data released by the US Price Index of Personal Consumption Expenditure (PCE) Inflation reached 0.4% in April, up from 0.1% in the previous month, according to the report.

and This is an increase of 4.4% over the previous year. . The price of services has risen more than the price of goods. The increase in food was mostly steady, but the energy increased significantly, affecting the final result.

Because this metric (PCE) is preferred by the Federal Reserve which is to be expected keep raising interest rates And don’t cut it this year.

Currently, interest rates have been rising since March 2022, 5.00% and 5.25% .

This will lead to higher lending costs to households and businesses to ease price pressures.

Members of the government agency are divided on whether to repeat the 11th rate hike or suspend rate hikes. The final decision is The next Fed policy meeting is scheduled for June 13-14. .

Source: Biobiochile

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