International Monetary Fund President Christine Leadgard has some advice for Federal Reserve Chairwoman Janet Yellen: do not raise interest rates:
The International Monetary Fund wants the Federal Reserve to wait until 2016 before it raises its interest rates off their historic lows. The U.S. economy isn't healthy enough to act before that, the IMF concludes.That goes against what Fed Chair Janet Yellen said just two weeks ago during a speech in Rhode Island. Yellen sees signs of a recovery and believes the Fed will be able to raise rates sometime this year. Most experts believe the Fed will raise rates in September, but the IMF recommendation will likely re-open the debate.
Thursday's IMF report is another worrisome sign that the U.S. economy is stalling. Although the IMF still expects America's economy to grow this year at a rate of 2.5%, that is almost in line with last year's growth.
While hiring has picked up, pay has not. Wages only grew by 2.2% in April compared to year ago, well below the Fed's goal for 3.5% growth. And 6.6 million Americans are working part-time jobs but want full-time jobs -- much higher than the pre-recession level.
America's economy contracted in the first quarter this year, leading the IMF to believe that the first few months of 2015 will drag down growth for the year.
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As much as I hate to agree with the IMF Leagard is right that the American economy is not nearly as strong as Yellen claims . Of course, Yellen has been claiming that the economy is recovering and a rate increase is "just around the corner" for some time. The only way the American people can learn how the Fed really views the economy-- and why it raises, cuts, or leaves interest rates the same, is for Congress to pass Audit the Fed.
Tags: Audit the Fed