Date
25 July 2017
World Bank chief economist Kaushik Basu warns that a premature move by the Federal Reserve could cause the dollar to strengthen, which may slow the US economy and sideswipe emerging and developing countries. Photo: Internet
World Bank chief economist Kaushik Basu warns that a premature move by the Federal Reserve could cause the dollar to strengthen, which may slow the US economy and sideswipe emerging and developing countries. Photo: Internet

World Bank, IMF want Fed to delay rate rise until 2016

The World Bank has joined the International Monetary Fund in urging the US Federal Reserve to hold off raising rates until next year, citing an uneven recovery in the United States and the risks to emerging markets of tightening policy any sooner, Bloomberg News reported.

“My concern is that the signals coming out of the US economy have been mixed,” World Bank chief economist Kaushik Basu told reporters Wednesday in Washington on a conference call to discuss the bank’s semiannual global economic forecasts.

A premature move by the Fed could cause the dollar to strengthen, which may slow the US economy and sideswipe emerging and developing countries, he said.

The development bank lowered its forecast for US growth this year to 2.7 percent, from 3.2 percent in January. The bank also expects the US to expand 2.8 percent next year, down from its 3 percent forecast in January.

The IMF issued a similar warning last week, urging the US central bank to delay raising rates until next year unless growth and inflation pick up more than expected.

Fed chair Janet Yellen on May 22 said she still expects to increase interest rates in 2015 if the economy meets her forecasts.

Fed policymakers will probably raise rates twice this year starting in September, according to economists surveyed by Bloomberg News.

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