By Isaac Cohen*
At a press conference, held in Washington DC last week, the Managing Director of the International Monetary Fund, Madame Christine Lagarde stated the institution’s opinion about the most anticipated US monetary policy decision.
The statement was issued during a presentation of the results of a periodic report on the US financial sector. First of all, the Managing Director revealed that this year’s growth forecast for the US economy, on account of the slowdown in the first quarter, has been revised downwards to 2.5 percent, from the April estimate of 3.1 percent. Then, the first recommendation on monetary policy deserves full quotation: “we think that there is a case for waiting to raise rates until there are more tangible signs of wage or price inflation that are currently evident. …we believe that a rate hike would be better off in early 2016.”
It is not uncommon for the Monetary Fund to express openly its opinion on member policies , particularly when they are from borrowers in distress. However, the United States is not a borrower it is the institution’s major stock holder. Perhaps in recognitio of this factn, Madame Lagarde added: “regardless of the timing, higher US policy rates could still result in significant market volatility with financial stability consequences that go well beyond the US borders.”
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.