The U.S. Federal Reserve’s upcoming rate cuts are “in line” with International Monetary Fund (IMF) advice, which emphasized controlling inflation but now sees risks shifting toward the labor market, IMF economic counselor Pierre-Olivier Gourinchas said on Friday.
Gourinchas noted that the Fed’s recent signals align with IMF recommendations. With inflation improving and labor markets showing signs of cooling, he suggested that the Fed might ease on cooling aggregate demand and bring interest rates closer to neutral if labor markets no longer contribute to inflation.
While acknowledging ongoing inflation risks, Gourinchas stressed that the U.S. job market is cooling from a position of strength. He advised that rate cuts should be calibrated based on incoming economic data.