IMF says Fed must maintain restrictive policy to curb US inflation
The IMF says the US Federal Reserve must maintain restrictive monetary policy to lower inflation to the 2% target, citing high energy prices and AI investment as key drivers.
The International Monetary Fund (IMF) has said the US Federal Reserve must maintain a restrictive monetary policy stance to bring inflation down to its 2 per cent target. The IMF expressed support for the Fed's focus on price stability as a policy priority.
IMF spokesperson Kozak said US inflation is not driven by wage growth but primarily by high energy prices and the ongoing boom in artificial-intelligence (AI) investment. She noted that AI stock valuations remain at risk from a reassessment of long-term profitability, and it is too early to judge the impact of recent AI industry developments on inflation pressures.
The IMF identified two main factors driving US inflation: demand growth from AI investment and data-centre construction, and higher energy prices resulting from the Iran war and the blockade of the Strait of Hormuz.