|

IMF: Fed likely needs to raise rates as soon as late 2022 – Bloomberg

Late Thursday, Bloomberg came out with the headlines from the International Monetary Fund (IMF) that propel the Fed rate hike chatters while saying, “The Federal Reserve probably will need to begin raising interest rates in late 2022 or early 2023 as increased government spending keeps inflation above its long-run average target.”

The IMF’s assessment of countries’ economic and financial developments following meetings with lawmakers and public officials also mentioned, per Bloomberg, that the US central bank likely will begin to scale back asset purchases in the first half of 2022.

Additional key statements (from Bloomberg)…

The IMF forecasts the increase (in Inflation) to be transitory, with the index peaking at 4.3% and dropping to around 2.5% by the end of 2022. 

Fund staff estimates that the higher U.S. spending proposed by President Joe Biden in the infrastructure-focused American Jobs Plan and the social-spending-based American Families Plan -- which have yet to pass -- would increase growth in the gross domestic product by a cumulative value of about 5.25% from 2022 to 2024.

The IMF raised its estimate for U.S. economic expansion this year to 7% -- the fastest pace since 1984 -- from a 6.4% forecast in April.

Fx implications

Given the increased odds of the Fed’s monetary policy adjustments, the latest comments from the IMF can help the US dollar to add some more gains, weighing on the commodity prices. That said, gold halts the two-day recovery mover around $1,776 by the press time of the early Asian session on Friday.

Read: Gold Price Forecast: XAU/USD recovery towards $1,800 awaits US NFP

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

More from Anil Panchal
Share:

Editor's Picks

EUR/USD keeps the bid bias just over 1.1800

EUR/USD has started the week on a positive foot, hovering around the 1.1800 region in the latter part of Monday’s session. The pair’s recovery comes on the back of a decent decline in the US Dollar, as investors keep their attention on the evolving US–EU trade relationship after President Trump’s announcement of sweeping global tariff hikes.

GBP/USD looks stuck around 1.3500 amid firm gains

GBP/USD is pushing further north on Monday, revisiting the 1.3500 hurdle and beyond. Cable’s uptick is largely being fuelled by the broader softness in the Greenback, amid lingering uncertainty around tariffs.

Gold pops above $5,200, four-week highs

Gold is holding onto its bullish tone on Monday, reaching new multi-week highs just past the $5,200 mark per troy ounce. Fresh trade-war concerns, coupled with rising geopolitical tensions in the Middle East, are keeping demand for the yellow metal well on the rise.

Crypto Today: Bitcoin, Ethereum, XRP intensify sell-off as tariff uncertainty weighs

Bitcoin, Ethereum and Ripple are trading amid increasing selling pressure at the time of writing on Monday, as investors react to fresh trade uncertainty over US President Donald Trump’s push for more tariffs.

Supreme Court nixes tariffs, Trump teases 15% global tariff

On February 20th, the Supreme Court ruled that Trump’s global tariffs under IEEPA authority were unconstitutional, effectively nullifying the framework. However, the relief was short-lived. Within hours, Trump floated a 15% blanket tariff under an alternative legal authority.

XRP recovers slightly as bearish sentiment dominates crypto market

Ripple is rising above $1.40 at the time of writing on Monday amid fresh tariff-triggered headwinds in the broader cryptocurrency market. The sell-off to $1.33, the token’s intraday low, can be attributed to macroeconomic uncertainty, geopolitical tensions and risk-averse sentiment among other factors.