Fed and BoJ in Focus: IMF Welcomes Monetary Policy Decisions

The International Monetary Fund (IMF) expresses satisfaction with the recent decision of the US Federal Reserve to cut the key interest rate and adopt a more cautious future outlook. Given the uncertainties in the US economy, the IMF considers these measures appropriate, according to spokeswoman Julie Kozack. Recent data suggests that the labor market is cooling and inflation is higher than expected, but continues to decline towards the targeted goal. In this context, the IMF considers the Fed's actions appropriate. According to Kozack, the disinflationary process in the US was less costly in terms of jobs than many had feared. The IMF expects the core rate of PCE inflation, the Fed's preferred metric, to be just under 3% by the end of 2024, which is a step closer to the Fed's 2% goal. The IMF also welcomes the Bank of Japan's decision to keep interest rates unchanged. It is recommended to continue pursuing a data-driven monetary policy to monitor both the normalization of policy and the achievement of inflation targets. Regarding the plans of the future US president to introduce a strategic Bitcoin reserve, Kozack did not want to comment. The IMF will comprehensively review all measures once they are implemented. A recent IMF loan agreement with El Salvador of $2.4 billion requires the country to reduce its official Bitcoin activities. According to Kozack, the IMF sees both opportunities and risks concerning crypto-assets, including risks to financial stability and consumer protection. Therefore, countries should develop appropriate regulatory frameworks. However, the IMF acknowledges that financial institutions are increasingly relying on the underlying crypto technology, for example in payment systems and security solutions. The strong demand from investors for crypto-assets also reflects the assessment that these asset classes could offer diversification advantages.