IMF: US Inflation Won’t Hit Fed Target Until 2027, Delaying Rate Cuts

The International Monetary Fund (IMF) stated that US inflation is not expected to return to the Federal Reserve's 2% target until early 2027, signaling that significant interest rate relief is distant. This assessment, part of the IMF's Article IV review of the Trump administration, contrasts with the President's optimistic view on borrowing costs. The IMF also flagged significant fiscal risks, noting the US current account deficit is too large and projecting federal deficits will remain between 7% and 8% of GDP, more than double the administration's targets. The Fund recommended fiscal consolidation over tariffs to narrow the deficit and warned that the upward path of public debt, projected to hit 140% of GDP by 2031, poses a growing stability risk. Consequently, sticky inflation and the expanding fiscal deficit reduce the probability of aggressive rate cuts, reinforcing caution for risk assets like crypto, as the administration's own fiscal expansion structurally prevents lower rates.

(Source：BeInCrypto)