US Federal Reserve ‘Should Wait’ on Raising Interest Rate

IMF Monetary and Capital Markets Department Director Jose Vinals said that amid more uncertainty in the global economy, it is the IMF's judgement that the Federal Reserve should wait to increase policy rates until there are further signs of inflation rising steadily towards its objective with continued strength in the labor market.

WASHINGTON (Sputnik) — The US Federal Reserve should postpone an interest rate increase as uncertainty in the global economy continues to exist, IMF Monetary and Capital Markets Department Director Jose Vinals said in a press conference on Wednesday.

"Amid more uncertainty in the global economy, it is our judgement that Federal Reserve should wait to increase policy rates until there are further signs of inflation rising steadily towards its objective with continued strength in the labor market," Vinals said.

In September, the US Federal Open Market Committee, a body that operates under the Federal Reserve, announced it would keep the interest rate unchanged at 0 to 0.25 percent range.

Federal Reserve Chair Janet Yellen said increasing the interest rate will depend on wide range of economic and financial indicators, including progress towards the 2 percent inflation target and improved labor market conditions.

Yellen also noted that the longer the Federal Reserve waits in increasing the interest rate, the steeper subsequent rates increases will be.

Vinals, however, urged the US authorities to adhere to gradual changes in the further rates hike.

"The pace of subsequent policy rates increases should be gradual and well-communicated," he argued.

The Federal Reserve has previously stated that an interest rate increase could take place before the end of 2015.