Skip to content

IMF Calls for Continued Monetary Tightening from Fed to Curb Inflation

The International Monetary Fund (IMF) encourages the US Federal Reserve and global central banks to sustain their monetary tightening policies in a battle against enduring inflation.

IMF logo
IMF logo

IMF Advocates Persistent Monetary Strategy

The International Monetary Fund (IMF) strongly appealed to the US Federal Reserve and other central banks worldwide to maintain their current monetary policies. The IMF's focus is on tackling the persistent problem of inflation.

Inflation Still a Key Concern in the US

Julie Kozack, an IMF spokesperson, pointed out that the inflation rate has slowed down in the United States but continues to be a significant issue. Kozack hinted that if inflation proves more stubborn than anticipated, the Federal Reserve might have to prolong and intensify interest rate hikes.

Upcoming Release of Updated World Economic Outlook

The IMF has announced it will publish an updated World Economic Outlook on July 25. Earlier in April, the IMF cautioned about hidden vulnerabilities in the financial system that could potentially trigger a new crisis and affect global growth this year.

Lowered Forecasts for Global Growth

The IMF has slightly lowered its global growth predictions for 2023 and 2024, suggesting real GDP growth of 2.8% and 3.0%, respectively, a tenth of a percentage point lower than the January predictions for each year. In 2022, the global economy had a growth rate of 3.4%.

Need for Immediate Policy Measures

Noting the challenges facing the global economy in the medium term, Kozack emphasized the need for current policy measures. She argued that central banks should persevere with monetary tightening to reduce inflation effectively.

US Economy Review Highlights Inflation Risks

The IMF's comments on the US economy followed a comprehensive review of US policies, known as "Article IV." This review underscored the ongoing worry about inflation risks, confirmed the IMF's viewpoints on the resilience of the US labor market, and affirmed the need for the Federal Reserve to stay its course on monetary policy to ensure sustainable inflation reduction.