IMF warns of rising US recession risk and defends Fed rate policy

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Donald Trump’s trade war pushed the world economy a “significant downturn”, with the IMF warning the Federal Reserve, protecting the Federal Reserve’s policy on interest rates.

In its latest global economic outlook, the fund has given its growth forecast to its growth in the United States this year, and has reduced its views for the larger economy, including China, India, Brazil and South Africa, along with all other G7 countries.

Funds have said that their trade tensions need to be “urgently” to avoid more damage to countries to increase countries. “If sustainable then this sudden growth of uncertainty of tariffs and minors will slowly slow the global growth.”

This month, equity has moved to the United States and other large markets as investors have increased the uncertainty over US trade barriers and uncertainty over Trump’s next move.

The sale closed on Monday was resumed on Monday, carrying less dollars in fear that Trump would try to remove US Federal Reserve Chairs Je Powell From his position – threat to Fed’s independence – such as the President called for instant rates to reduce the rate.

IMF chief economist Pierre-Alyvia Gaurichas said the central forecast for the fund was that the United States and global economies could avoid the downturn this year, after entering the scene in 2021. However, the possibility of recession in the United States has increased by about 5 percent, Gauerinchas says it is compared to 20 percent compared to its previous world economic outlook.

“The main risk in front of us is that the tariffs and trade tensions may increase further,” he said in an interview. “There is a risk of being more stronger than financial conditions.”

The Tariff According to the IMF, the United States will also be fed in higher inflation, this year consumer prices will increase by 3 percent, which is a full percentage of points than expected.

The central bank’s independence to retain inflation is important that Gaurichas repeated the argument of the fund that Gaurichas said that Fed had the right to hold interest rates because it considered Levi’s effect. The IMF’s view has assumed that this year two fed rates will be reduced.

He has added that additional trade is presenting the shock of supply of barriers that can affect “materially” prices in the coming years.

“Fed at the moment says, ‘Okay, how is it going to play?'” Gauerinchas said. “And wait and seem out the things are very appropriate to get out.”

This attitude comes with the gathering in Washington for the IMF/World Bank spring meetings, which will be dominated by the discussion of global trade conflicts.

The IMF has reduced its outlook for global growth this year by half points and trimmed its prediction from 2026 to 3 percent. It warns about “main negative shock” about increasing trade barriers about increasing trade barriers.

The forecast included the announcement of US tariffs and counter-measures by other countries between February 1 and April 4-before the trump announced that most of its so-called mutual tariffs were raised to the people in China. Of the G20 countries, only Türkiye, Argentina and Russia saw the growth upgrades.

The fund has dropped its growth to 5.7 percent in 2021-2.7 percent from the previous forecast-and 5.7 percent in 2026. It still has left the country as the fastest growing G7 economy this year and later, but it is less than 2.5 percent of the United States in 2021.

“The risk of intense risk prioritizes the outlook,” the fund said. “A wide financial instability with the loss of international financial system may occur.”

German growth is now expected to zero this year with the expansion of only 1.5 percent in 2026, and the United Kingdom is scheduled for 5.5 percent growth this year and the next 5.5 percent.

China is also ready for slow, the IMF is 5 percent this year and the expansion of the next, compared to 5 percent in 2021.

The IMF Its main “reference” scene for the global economy is the outline of the scene.

However, a national alternative includes Trump’s 90 -day break in most of the so -called mutual tariffs, the fund has decided that if the duties are delayed indefinitely, it will not “change” objectively to its reference forecast.

It is now being created between the United States and China and the level of trade barriers – the two largest economies in the world.

The negative effects of the obstacles will not be limited to the nearest-term, adding funds. It hopes that the tariffs will reduce the long-term competition and innovation when the rent-search increases, “more weight on the outlook”.

It also added: “If countries simplify their current trade policy position and forge new trade agreements, it can improve immediately.”