No rush for US Fed to cut rates, IMF's chief economist says
inflation data is allowing the Federal Reserve to begin a «very reasonable» shift toward easing rates, but a still-strong U.S. labor market means that there's no rush to make decisions, International Monetary Fund chief economist Pierre-Olivier Gourinchas told Reuters.
Gourinchas said in an interview accompanying the release of new IMF growth forecasts on Tuesday it is better for the Fed to wait a bit longer to ensure there are no further upside surprises on inflation like those in the first quarter that delayed expected rate cuts to later this year.
«Given the good news on inflation, it's very natural that the Federal Reserve is now starting to look at what's happening in the labor market and wanting to make sure that they don't overdo it» with tight monetary policy, Gourinchas said.
«They're in a position where they can afford to wait a little bit, and then see how some of the additional reports come in — be data-dependent as sometimes the central bankers like to say — and then adjust course based on that.»
Gourinchas spoke to Reuters after Fed Chair Jerome Powell told an economic group on Monday that three inflation readings during the second quarter «add somewhat to confidence» that the pace of price increases is returning to the Fed's target in a sustainable fashion. These included last week's first monthly fall in the Consumer Price Index in four years.
Gourinchas said he continues to anticipate one Fed rate cut this year, but declined to specify his preferred timing for that first move.
The IMF
