In its latest World Economic Outlook update, the International Monetary Fund said “the momentum on global disinflation is slowing, signaling bumps along the path.”
by Hakyung Kim
NBC Washington
The International Monetary Fund warned Tuesday that upside risks to inflation have increased, calling into question the prospect of multiple Federal Reserve interest rate cuts this year.
In its latest World Economic Outlook update, the IMF said “the momentum on global disinflation is slowing, signaling bumps along the path.” The rise in sequential inflation in the U.S. earlier in 2024 has put it behind other major economies in the quantitative easing path, the report said.
The report comes as traders ramp up bets for a Fed rate cut in September. Per the CME Group’s FedWatch tool, Wall Street has priced in a 100% chance of lower rates at the Sept. 18 meeting. Traders also expect another rate decrease in November.
However, IMF chief economist Pierre-Olivier Gourinchas told CNBC’s “Squawk on the Street” on Tuesday that one rate cut from the Fed is most appropriate this year, highlighting still-stubborn services and wage inflation as complications to the path to lower inflation.