- IMF
The Federal Reserve and its Chairwoman Janet Yellen have been surprisingly confident about future prospects of the world's largest economy. May's Beige Book showed activity in all sectors picked up. This week the FOMC will unveil its June's statement, and some even believe policymakers will not proceed with the tapering this month. Dukascopy COO Marc Spaelti joined the sceptics. It seems that we should prepare for a dovish statement this week.
Fed officials are hoping for a rebound in the second quarter, however, it seems, we can forget about the 3% expansion over this year. The International Monetary Fund revised its this year's growth forecast for the U.S. to the downside, saying the Federal Reserve should have scope to keep interest rates on hold for longer than it was initially expected. The IMF now expects a 2% expansion for this year, down from 2.8% expected in April. At the same time, the IMF left its 2015 estimate unrevised at 3%, also saying they do not expect the economy to see full employment until the end of 2017, citing weak inflationary pressure. Despite the forecast for the next year was left unchanged, the fund said there is a significant slack in the economy, while policymakers should do more to boost growth in the near term. At the same time, politicians should cut the government spending and increase its revenue in order to avoid public debt to overwhelm the financial sector. Keeping it all in mind, perhaps the Fed should take a pause?
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