{"id":118622,"date":"2021-07-22T22:17:51","date_gmt":"2021-07-22T22:17:51","guid":{"rendered":"https:\/\/fin2me.com\/?p=118622"},"modified":"2021-07-22T22:17:51","modified_gmt":"2021-07-22T22:17:51","slug":"imf-says-fed-highly-effective-must-carefully-communicate-withdrawal-plans","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/imf-says-fed-highly-effective-must-carefully-communicate-withdrawal-plans\/","title":{"rendered":"IMF says Fed 'highly effective,' must carefully communicate withdrawal plans"},"content":{"rendered":"
FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS\/Leah Millis\/File Photo<\/figcaption>

WASHINGTON (Reuters) – The International Monetary Fund\u2019s Executive Board on Thursday said the U.S. Federal Reserve has been \u201chighly effective\u201d at managing the COVID-19 crisis and supporting recovery with its commitment to overshoot a 2% inflation target in the near term.<\/p>\n

The board, releasing its full report here on its annual assessment of U.S. economic policies, said the Fed must carefully communicate its thinking to ensure that the eventual withdrawal of monetary accommodation and asset purchases is orderly and transparent.<\/p>\n

The IMF has raised concerns that higher U.S. interest rates will drain capital flows from emerging markets at a critical time in their recovery.<\/p>\n

\u201cManaging this transition \u2014 from providing reassurance that monetary policy will continue to deliver powerful support to the economy to preparing for an eventual scaling back of asset purchases and a withdrawal of monetary accommodation \u2014 will require deft communications, under a potentially tight timeline, to avoid market misunderstandings, volatility in market pricing, and\/or an unwarranted tightening in financial conditions,\u201d the IMF said.<\/p>\n

The Fund\u2019s board also said that Biden administration proposals to invest in infrastructure, aid vulnerable households, boost labor force participation and improve productivity were welcome, but noted that \u201ca better targeting of policies\u201d would strengthen their impact on demand and equality and lessen the risk of sustained inflation.<\/p>\n

The IMF said the United State should prioritize spending towards programs that have the biggest impact on productivity, labor force participation, poverty reduction and the transition to a low-carbon economy.<\/p>\n

The Fund also said more could be done to boost tax revenues, including phasing out tax credits at lower levels of household income, increasing the payment of estate taxes and reformulating business taxes on cash flow instead of profits.<\/p>\n

\u201cReorienting the administration\u2019s tax and spending proposals in this way would likely imply a slower (but more sustained) demand impulse, create a bigger boost to aggregate supply, and, in so doing, lessen the near-term risks posed by a sustained upswing in inflation,\u201d the Fund said.<\/p>\n

The IMF report contains earlier estimates that the U.S. economy will grow 7% in 2021, assuming that the Biden administration\u2019s infrastructure and human capital investment plans are approved by Congress.<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS\/Leah Millis\/File PhotoWASHINGTON (Reuters) – The International Monetary […]<\/p>\n","protected":false},"author":3,"featured_media":118621,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"\nIMF says Fed 'highly effective,' must carefully communicate withdrawal plans - Fin2me<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fin2me.com\/markets\/imf-says-fed-highly-effective-must-carefully-communicate-withdrawal-plans\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"IMF says Fed 'highly effective,' must carefully communicate withdrawal plans - Fin2me\" \/>\n<meta property=\"og:description\" content=\"FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. 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