US Economy: IMF downgrades outlook for U.S. economy, urges Fed to delay rate hike

The International Monetary Fund urged the Federal Reserve to wait until the first half of 2016 to start raising short-term interest rates because the U.S. economy remains subpar.

In its annual checkup of the U.S. economy released Thursday, the IMF said "the underpinnings for continued growth and job creation remain in place." But America's "momentum was sapped in recent months by a series of negative shocks," including a harsh winter and a strong dollar that hurts U.S. exports.

The IMF predicted the U.S. economy will grow 2.5 per cent this year, down from its April forecast of 3.1 per cent.

The agency said the Fed should wait for more signs of improvement -- specifically "greater signs of wage or price inflation." The central bank has kept its key benchmark rate at a record low near zero since December 2008.

Barring unexpected good news, the IMF said the Fed should probably hold off until next year.

Read more: IMF downgrades outlook for U.S. economy, urges Fed to delay rate hike | CTV News

Global Economy: Grim global growth outlook says World Bank

The World Bank has cut its global growth forecast. In its bi-annual report, the predicted global growth will be 3 percent for this year and 3.3 for 2016.

The report emphasises that  the economy is “running on a single engine. The American one. This does not make for a rosy outlook.”

In June last year the World Bank stated growth would reach 3.4 percent for 2015 and 3.5 percent next year.

The Bank adds that the low oil prices may help importing countries such as India, which is expected to grow by some 7 percent next year.

On the other hand oil producers like Russia look set to loose out. The Russian economy is on course to contract by 2.9 percent this year.
The recovery, says the report, is at best “sputtering” along in the eurozone and Japan.

 Read more: Grim global growth outlook says World Bank | euronews, economy

EU Outlook Cut by US based Moody’s on Germany, France, U.K. Risks

The European Union’s rating outlook was cut to negative by Moody’s Investors Service, reflecting the risks to Germany, France, the U.K. and the Netherlands that account for about 45 percent of the group’s budget revenue. 

The ratings company lowered the outlook on the EU’s Aaa long-term bond rating from stable, according to a statement released in Frankfurt late yesterday. It also changed to negative from stable its outlook on the provisional Aaa rating for the EU’s medium-term note program.

The change “reflects the negative outlook on the Aaa ratings of the member states with large contributions to the EU budget,” Moody’s said. “The creditworthiness of these member states is highly correlated, as they are all exposed, albeit to varying degrees, to the euro-area debt crisis.”

Read more: EU Outlook Cut by Moody’s on Germany, France, U.K. Risks - Businessweek

Europe is 'fragile, but fixable' - by Gordon Isfeld

Bank of Canada governor Mark Carney said Tuesday the economic deterioration in Europe is "fragile, but fixable" and that he does not expect the United States to fall back into recession "although the risk has clearly risen."

In a speech to the Board of Trade in Saint John, N.B, Carney also called on European leaders to come up with a "comprehensive" plan to backstop the region's banks and restore investors' confidence.
His comments came on the same day as the International Monetary Fund cut economic growth outlook for Canada and the world.

For more: Europe is 'fragile, but fixable'