The US Federal Reserve must be certain that the job market and inflation are strong enough to justify raising interest rates, IMF managing director Christine Lagarde said after a G20 meeting focused on the pressure the increase might place on the global economy.
“The Fed has not raised interest rates in such a long time, that it should really do it for good, not give it a try and then have to come back,” Lagarde said at a news conference in Ankara.
“The IMF thinks that it is better to make sure that data are absolutely confirmed, that there is no uncertainty, neither on the price stability front nor on the employment and unemployment front, before it actually makes that move,” she said.
Traders are torn on when the Fed will raise interest rates. The Fed could raise or hold rates when it meets on Sept. 16 and Sept. 17.
Investors scaled back expectations for the US’s first rate increase since 2006 after a sell-off in China became a global stock-market rout. The Fed’s key interest rate has been frozen since 2008.
Fed Vice Chairman Stanley Fischer gave a mixed review of the latest US jobs report in a briefing to G20 officials, Luxembourg Minister of Finance Pierre Gramegna said in a Bloomberg television interview.
“He told us that the numbers in the US are excellent because unemployment went down from 5.3% to 5.1%, which is an excellent number, but then he immediately cautioned that the number of 173,000 additional jobs was an August figure and that the August figure wasn’t very reliable,” Gramegna said.
Emerging-market officials at the G20 were divided on whether it is better for the Fed to tighten its policy this month or later on, saying that there were “both sentiments in the room,” he said.
The gain in payrolls, while less than forecast, followed advances in July and June that were stronger than previously reported, the US Department of Labor said on Friday. The jobless rate was the lowest since April 2008.
The strength of the economy and the jobs market has yet to lift inflation up to the Fed’s 2% target. Prices in the U.S. rose 0.3% in the 12 months through July, measured by the Fed’s preferred gauge. Inflation has lingered below the Fed’s target for more than three years.