Key facts
- IMF urges Federal Reserve to remain cautious on interest rates.
- Upside inflation risks cited from energy prices and tariffs.
- IMF forecasts inflation returning to 2% target by end of 2027.
- Kevin Warsh to chair his first Federal Reserve policy meeting.
The International Monetary Fund (IMF) has advised the Federal Reserve to exercise caution regarding interest rates, citing persistent upside risks to inflation. These risks stem from energy price shocks and the increasing pass-through of higher tariff costs. IMF spokesperson Julie Kozack stated that the Fund now forecasts inflation returning to the Federal Reserve's 2% target by the end of 2027, a delay from its previous projection of mid-2027. Kozack emphasized that the Fed's policy actions will need to proceed with caution and be carefully calibrated to incoming data. This guidance comes as Federal Reserve official Kevin Warsh is set to chair his first policy meeting on June 16-17.