IMF says US should raise taxes, wait until late 2024 to cut rates

IMF on Taxes:  International Monetary Fund on Thursday said U.S. Federal Reserve should not cut interest rates until "late 2024" and government needs to raise taxes to slow growing federal debt -- including on households earning less than President Joe Biden's $400,000-a-year threshold.

prescriptions came in detailed staff report from IMF's annual "Article IV" review of U.S. economic policies released on Thursday. Fund has been emphasizing in recent weeks need for more fiscal prudence as U.S. deficits continue to grow despite robust economic growth and as Republicans and Democrats formulate tax and spending proposals ahe of November's presidential election.

IMF Chief Economist Pierre-Olivier Gourinchas told Reuters on Tuesday that Fed could afford to wait longer to start easing monetary policy due to a strong labor market. But staff report specifies that this shift should come in "late 2024," to avoid more upside surprises in inflation data.

"Given salient upside risks to inflation — brought into stark relief by data outturns earlier this year — it would be prudent to lower policy rate only after re is clearer evidence in data that inflation is sustainably returning to FOMC’s 2 percent goal."