IMF Cuts 2016 U.S. Economic-Growth Forecast to 2.2%

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Wall Street Journal

The International Monetary Fund cut its outlook for U.S. economic expansion this year, citing a weak energy sector, a strong dollar and turmoil overseas, and warned the country is at risk of financial turmoil from the U.K. if voters decide to leave the European Union.

The IMF said Wednesday that it now expects the American economy to grow 2.2% this year, down from its 2.4% forecast in April and slower than last year’s pace. Although the fund kept its forecast for a pickup in 2017 at 2.5%, it said recent weak data means the Federal Reserve should stay its hand on interest rates for a while.

“There is a clear case to proceed along a very gradual upward path for the Fed-funds rate,” the IMF said in its annual review of the U.S.

And despite the continuing, if slower, expansion of the U.S. economy, the fund said the country faces a gloomy growth outlook in years ahead. “A confluence of forces…will weigh on the prospects for continued gains in economic well being” without major overhauls by the government, the IMF said.

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