IMF warns on US economy

By Krishna Guha in Washington
Published: June 21 2008 03:00 | Last updated: June 21 2008 03:00

The International Monetary Fund yesterday warned that the US economy was likely to stagnate in the second half of this year, pouring cold water on hopes that recovery could soon be under way.

It said that continued economic weakness would result in inflation risk going down, not up, in the coming months, and urged the Federal Reserve to keep interest rates on hold for the time being. The statement challenges market expectations that rate increases will soon be required.