IMF says delay the first rate hike until next year

In the IMF’s annual assessment of the global economy it has suggested that the Federal Reserve should delay raising rates until at least the first half of 2016 when there are more signs of a pickup in wages and inflation. "Based on the mission’s macroeconomic forecast, and barring upside surprises to growth and inflation, this would put lift-off into the first half of 2016. 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). However, deferring rate increases would provide valuable insurance against the risk of disinflation, policy reversal, and ending back at zero policy rates." According to the IMF the prolonged period of zero interest rates has created "pockets of vulnerabilities" rather than "broad-based excesses.” (VIEW LINK)