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  • IMF Says Fed Will Have to Remain Tight at 5 ¼ to 5 ½ Rate Until Late 2024; Warns of “Unpredictable Consequences” to Banks

IMF Says Fed Will Have to Remain Tight at 5 ¼ to 5 ½ Rate Until Late 2024; Warns of “Unpredictable Consequences” to Banks

June 01, 2023

by Pam Martens and Russ Martens Wall Street on Parade

Last Friday, at the start of Memorial Day weekend, researchers at the International Monetary Fund (IMF) released an analysis of where they think the U.S. economy is headed and the headwinds (read gale force winds) that can, potentially, be expected along the way.

Folks on Wall Street who were hoping that the Fed was at the end of its rate-hiking cycle, with a more dovish Fed juicing stock market returns later this year, likely had their holiday weekend ruined with this projection from the IMF:

“Achieving a sustained disinflation will necessitate a loosening of labor market conditions that, so far, has not been evident in the data. To bring inflation firmly back to target will require an extended period of tight monetary policy, with the federal funds rate remaining at 5¼–5½ percent until late in 2024.”