Washington, (IANS) The International Monetary Fund (IMF) on Thursday cut US economic growth forecast for 2015 down to 2.5 percent from its April’s prediction of 3.1 percent.
IMF chief Lagarde said on Thursday that the revised down forecast was largely due to the soft performance in the first quarter, according to Xinhua.
The US economy shrank at an annual rate of 0.7 percent in the first quarter, marking the third quarterly contraction after the financial crisis ended in mid-2009. The contraction was in part due to harsh winter weather, labour disputes in Western port, slowdown in investment in energy industry, and effects of strong US dollar.
After concluding the 2015 Article IV Consultation with the US on Thursday, the IMF said in a statement that these developments represent a temporary drag but not a long-lasting brake on growth.
The IMF suggested the US Federal Reserve should delay its first interest rate hike into the first half of 2016 in order to see greater signs of inflation growth.