The IMF is throwing up its hand to the U.S. Federal Reserve, calling for a delay in rate hikes until 2016.
It’s not everyday that you see an international organization give such explicit instructions.
— Mohamed A. El-Erian (@elerianm) June 4, 2015
Axel Merk, president of Merk Investments, has some advice for LaGarde, etal:
#IMF‘s Lagarde suggests more bureaucracy for enhanced financial stability. How about less ZIRP/QE to destabilize world instead?
— Axel Merk (@AxelMerk) June 4, 2015
The international governing body says that the Fed should wait for more of a pickup in wages and inflation, reports Reuters. The Fed has been cautious about an increase since initially indicating June could be a possibility earlier this year but weak data on the first quarter appears to have given the policymakers pause.
“A later lift-off could imply a faster pace of rate increases following lift-off and may create a modest overshooting of inflation above the Fed’s medium-term goal (perhaps up toward 2.5 percent),” the Fund said. “However, deferring rate increases would provide valuable insurance against the risk of disinflation, policy reversal, and ending back at zero policy rates.”
Fed chair Janet Yellen has has insisted that while the economic numbers from the first quarters haven’t been great, recovery is on track and a rate rise is looking likely for 2015. The next Fed meeting is scheduled for June 16 and 17.
Photo: Adam Tinworth via Flickr.