IMF Director: We expect US Federal Reserve to cut interest rates once this year

Kristalina Georgieva, Director General of the International Monetary Fund, confirmed that the Fund’s expectations for inflation in the United States are somewhat more optimistic than the Fed’s expectations, and that it is likely to cut interest rates once this year.

Georgieva attributed the optimistic inflation estimates to the country’s post-pandemic consumer spending boom, which she said may now be in the process of waning.

She pointed out that the path of inflation in the United States gives the International Monetary Fund confidence that it will return to the US Federal Reserve’s target of 2% in 2025, ahead of the central bank’s own expectations that indicate 2026.

The Director of the International Monetary Fund continued: “We still see the possibility of lowering interest rates in the United States once in 2024, and further reductions in 2025.”

She indicated that the US Federal Reserve should lower interest rates only after there is clear evidence that inflation returns sustainably to the 2% target.