Anxiety over financial stability and shadow banking risks appear to have force Christine Lagarde and her fellow extrapolators to hit the panic button:
- *IMF CUTS U.S. 2015 GROWTH FORECAST TO 2.5% FROM 3.1%
- *FED SHOULD WAIT FOR TANGIBLE SIGNS OF WAGE, PRICE GAINS: IMF
- *DOLLAR `MODERATELY OVERVALUED,' CURBING U.S. GROWTH, JOBS: IMF
- *IMF URGES FED TO DELAY FIRST RATE INCREASE UNTIL 1H 2016
Adding that they viewed the Dollar as "moderately overvalued" and any more appreciation would be "harmful," it seems global disinflationary pressures have left the IMF no choice but to say publicly what everyone has uttered under their breath.
The Federal Reserve should hold off from raising interest rates until the first half of 2016, the International Monetary Fund said as it cut its U.S. growth forecast for the second time in three months.
The lender also said that the dollar was “moderately overvalued” and a further marked appreciation would be “harmful,” in a statement released in Washington on Thursday on its annual checkup of the U.S. economy.
“The FOMC should remain data dependent and defer its first increase in policy rates until there are greater signs of wage or price inflation than are currently evident,” the IMF said. Based on the fund’s economic forecast, and “barring upside surprises to growth and inflation, this would put lift-off into the first half of 2016.”
“There is a risk that a further marked appreciation of the dollar -- particularly one that takes place in an environment where policies to address growth deficiencies languish both in the U.S. and abroad -- would be harmful.”
The report also discussed financial stability, with the IMF pointing to higher risks in shadow banking, a potential lack of liquidity in fixed-income markets, and greater market risk-taking in the insurance industry
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Now Yellen is really cornered.. and just exactly how are the talking heads going to spin this as positive?