IMF Warns Fed to Not Raise Rates Until 2016

The International Monetary Fund has warned the US Federal Reserve against raising interest rates this year.

A rise risks adding to the growing economic and political threats to US growth, the IMF said in a health check on the world’s largest economy.

Many economists had forecast a rise in September, although recent economic and jobs data had dampened expectations.

The Washington-based IMF also warned that US share prices were hitting unsustainable levels.

A rate rise would trigger more gains in the value of the dollar, something that the IMF has said previously this year could stall growth and impact across emerging markets.

The dollar has risen about 20% against a basket of currencies during the past 12 months.

On Tuesday, the IMF said “growth could be significantly debilitated” by another rise in the dollar. Barring a major change in circumstances, the organisation urged keeping rates at the current 0.25% “into the first half of 2016 with a gradual rise in the federal funds rate thereafter”.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza