:max_bytes(150000):strip_icc()/GettyImages-2147933631-ba1ceca33a8c42b2b8d68107ebed76c6.jpg "IMF Forecasts Slower US Growth, Higher-for-Longer Global Interest Rates")
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Key Takeaways
- The International Monetary Fund forecast a decline in U.S. economic growth next year.
- It warned that sticky inflation could keep global interest rates higher for longer.
- The IMF forecast U.S. economic growth of 2.6% for 2024 and 1.9% next year.
The International Monetary Fund (IMF) forecast a decline in U.S. growth next year, also warning that interest rates may stay higher for longer as inflation remains stubbornly high.
The IMF in its latest outlook for the global economy predicted U.S. economic growth of 2.6% for 2024 and 1.9% next year as “the labor market cools and consumption moderates.”
The group kept its forecast for global economic growth unchanged at 3.2% in 2024 and projected 3.3% growth next year, up from 3.2% previously.
Sticky Inflation Portends Higher-for-Longer Rates, IMF Says
Inflation is sticky, supported by lofty services prices and wages, as well and geopolitical trade stresses, the IMF said, portending higher-for-longer interest rates.
“Services inflation is holding up progress on disinflation, which is complicating monetary policy normalization,” the IMF wrote. “Upside risks to inflation have thus increased, raising the prospect of higher-for-even-longer interest rates, in the context of escalating trade tensions and increased policy uncertainty.”
Still, the IMF said that falling energy prices and a “gradual cooling of labor markets” should bring inflation back to global central banks’ targets by the end of 2025.
Federal Reserve Chairman Jerome Powell and his colleagues who set U.S. monetary policy have said they need confidence that price pressures are easing before they move to cut their influential interest rate.