IMF’s U.S. Downgrade’s Impact on Rate Outlook

A sharp downward revision to the International Monetary Fund’s (IMF) U.S. growth forecast is a surprise but doesn’t necessarily mean that interest rates in the world’s number one economy will stay low for longer than anticipated, analysts say.

The IMF on Monday cut its U.S. gross domestic product (GDP) growth forecast to 2 percent for 2014 from 2.8 percent, estimated that U.S. inflation will stay below the Federal Reserve’s 2 percent target through 2017 and said the Fed should keep its key rate near zero longer than markets expect.

Some analysts challenged that view saying signs of stronger-than-expected growth in the U.S. economy pointed to monetary tightening sooner rather than later.

CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.