IMF makes a bold request to the US

IMF makes a bold request to the US



5 червня 2015 года
ICU

Yesterday, the IMF issued a statement on the US economy, which, in our view, is likely to have implications on a number of global economies, including Ukraine's. First, the fund downwardly revised its full-year real GDP growth rate for 2015 from 3.1% to 2.5% in light of negative developments that affected growth momentum in 1Q 2015. On the eve of this revision, the fund's US forecast of 3.1% growth was an outlier among other forecasters, including the US Fed's forecast, which also revised its forecast early this spring to the range of 2.3-2.7%, Bloomberg's forecast of 2.5% and the Wall Street Journal's economists' survey forecast of 2.2%. Even after yesterday's revision, the IMF's forecast is slightly more optimistic than the others mentioned. Second, in an effort to influence this month's upcoming Fed monetary committee meeting which will set a proper date for the anticipated rate increase, the IMF urged the Fed to postpone the rate hike from this year (which is widely expected by the market now) to 2016. Third, the fund also said that the US dollar is 'moderately overvalued'. We see this statement as an effort by the IMF to make the market more bearish toward the US dollar. The IMF's statement is quite powerful. It could change market sentiment. Should it succeed, the dollar is less likely to appreciate further. Its weakness would strengthen emerging market currencies, support commodity prices (thus helping net exporters of oil), and bolster the hryvnia by eliminating risk of further devaluation over the next three to nine months.

Источник: ICU

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