IMF Says US Inflation Risks Are Rising, Urges Fed Caution

The International Monetary Fund said inflation risks in the US are rising again and urged the Federal Reserve to proceed cautiously with monetary policy. In financial markets, expectations for interest-rate cuts may recede somewhat.

Walter Bloomberg reported on June 4 that the IMF sees higher US tariffs and rising energy prices as adding to inflation pressures and increasing upside risks to prices.

The IMF said those factors are feeding into consumer prices and underscored the need for the Fed to maintain a more cautious policy stance.

It also pushed back its forecast for US inflation to return to the Fed's 2% target, shifting the timing from mid-2027 to late 2027.

The IMF said financial markets have recently priced in some possibility of additional rate increases and advised the Fed to maintain a data-dependent approach based on economic indicators.

Clear communication about the policy path is also important, it added.

Rising energy prices tied to escalating tensions in the Middle East, along with the effects of US tariff policy, are adding to inflation uncertainty. Against that backdrop, markets are increasingly betting the Fed's first rate cut could be delayed.