The International Monetary Fund (IMF) on Thursday, 25 June 2026 endorsed the US Federal Reserve's decision to hold interest rates steady, citing solid economic momentum in the world's largest economy even as inflation remains above the Fed's 2% target. The IMF cautioned, however, that any future rate adjustments must be carefully calibrated to incoming data rather than fixed timelines.

Solid Growth Despite Inflation Overhang

Julie Kozack, Director of the IMF's Communications Department, told a regular press briefing that the US economy had demonstrated continued resilience. She pointed to revised first-quarter figures showing growth of 2.1% — stronger than the preliminary estimate — as evidence of that momentum.

'Growth momentum in the US economy has been solid,' Kozack said. She attributed the stronger-than-expected print partly to a rebound in government spending following the federal government shutdown in late 2025, alongside robust business investment that was also driving strong capital imports.

Labour Productivity a Standout Strength

Kozack highlighted labour productivity as a distinguishing feature of the US economy, calling it 'very strong' at a time when much of the world is grappling with weak productivity growth. 'The US, in that sense, is a bit of an outlier globally,' she said. This productivity edge, according to the IMF, underpins the economy's capacity to sustain growth even under restrictive monetary conditions.

IMF Backs Fed's Cautious Stance on Rates

On monetary policy, Kozack acknowledged that inflation remains above the central bank's objective but expressed confidence it would ease over time. 'We do see inflation is still above target, even though we do expect it to come down to reach the 2% target by the end of 2027,' she said.

The IMF described the Fed's decision to keep its benchmark rate on hold as appropriate given this dynamic. 'Any further policy actions by the Fed will need to proceed with caution, and they would need to be carefully calibrated to the incoming data,' Kozack said, signalling that the Fund does not anticipate — or recommend — any rush toward cuts.

Welcome for Fed Chair Walsh's Commitment

Kozack also offered a pointed endorsement of Federal Reserve Chair Kevin Walsh, welcoming his 'strong commitment to lead the FOMC in delivering price stability' — a signal that the IMF views the Fed's current leadership posture as aligned with global financial stability objectives. The Federal Open Market Committee (FOMC) has indicated that future decisions will hinge on the trajectory of inflation, employment, and broader economic conditions.

Why the Fed's Moves Matter Beyond the US

The IMF has consistently described the US economy as a primary engine of global growth, given its scale and deep integration with international financial markets. Federal Reserve decisions reverberate across capital flows, borrowing costs, exchange rates, and investment decisions in both advanced and emerging economies — including India, where dollar strength and US rate expectations directly influence the rupee and foreign institutional investor behaviour. This comes amid a broader global environment where central banks in Europe and Asia are navigating their own inflation-versus-growth trade-offs, making the Fed's data-dependent posture a closely watched benchmark.