IMF urges Fed caution on inflation as Warsh prepares to chair first policy meeting

The International Monetary Fund on Thursday urged the Federal Reserve in its first policy meeting led by new Fed Chair Kevin Warsh to stay cautious on rates due to persistent upside inflation risks from energy price shocks and increasing pass-through of higher tariff costs.

IMF spokesperson Julie Kozack told a regular press briefing that the Fund now forecasts that a return of inflation to the Fed's 2% target will be delayed to the end of 2027, compared with its previous forecast of mid-2027 for reaching that goal.

"So we've now delayed a bit further the return to target," Kozack said. "We do see sort of upside risk to inflation, and that it implies that the Fed's policy actions will need to proceed with caution and will need to be carefully calibrated to incoming data."

The Fed's policy-setting committee next meets on June 16-17.

Reuters

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