The downgrades begin as IMF releases latest Article IV

  • Sees 2017 growth at 2.1% compared to 2.3% in April
  • 2018 forecast cut to 2.1% from 2.5%
  • Says Fed should continue to hike "in a data dependent way"
  • Real GDP is now 12% above pre-crisis high
  • US needs lower tax rate with a simpler system with fewer exemptions
  • US outlook is clouded by medium-term imbalances. The US model is not working as well as it could in generating broad-based income growth
  • "Tax reform should focus on increasing revenues- GDP over the medium term including through a broad-based federal level consumption tax, a carbon tax, and a higher federal gas tax"
  • Weaker inflation numbers gives us concern there are downside risks in the US

Those lower forecasts put the IMF virtually in-line with the Fed. This was supposed to be the year that the US outperformed but it's shaping up to be another 2% year.

Watch the IMF press conference live.