| | | The IMF is warning that current U.S. fiscal policy poses risks to the global economy.
said in a statement Thursday on its annual checkup of the U.S. economy that a combination of tax cuts and increased public spending will boost debt, potentially spark inflation and lift the dollar, Bloomberg reports.
The fiscal stimulus backed by the Trump administration and the Republican-controlled Congress will give a short-term boost to the U.S. economy, the IMF said. But it also warned that adding fiscal stimulus when the economy is growing “will elevate the risks to the U.S. and the global economy.”
IMF Managing Director Christine Lagarde warned this week that clouds over the world economy are “getting darker by the day,” Bloomberg notes.
IMF Sees Risks in U.S. Fiscal Policy
June 15, 2018 12:38 p.m. ET
The International Monetary Fund is warning that current U.S. fiscal policy poses risks to the global economy.
The international organization said in a statement Thursday on its annual checkup of the U.S. economy that a combination of tax cuts and increased public spending will boost debt, potentially spark inflation and lift the dollar, Bloomberg reports.
The fiscal stimulus backed by the Trump administration and the Republican-controlled Congress will give a short-term boost to the U.S. economy, the IMF said. But it also warned that adding fiscal stimulus when the economy is growing “will elevate the risks to the U.S. and the global economy.”
That stimulus raises the risk of an “inflation surprise” for markets, and a quick increase in inflation could force the Federal Reserve to raise interest rates faster than expected, the IMF said.
The IMF’s warning comes as the global economy is seeing its strongest upswing in seven years, Bloomberg notes. The IMF expects global growth to pick up in 2018, but it expects momentum to wane in coming years as central banks raise interests rates and the effect of U.S. fiscal stimulus wears off.
On Thursday, the European Central Bank said its huge bond-buying program would likely end in December, another milestone as central banks move away from their post-financial crisis stimulus programs.
IMF Managing Director Christine Lagarde warned this week that clouds over the world economy are “getting darker by the day,” Bloomberg notes. |
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