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IMF says Fed taking appropriate action on rates given high US uncertainty

BY Reuters | ECONOMIC | 12/19/24 11:17 AM EST

WASHINGTON, Dec 19 (Reuters) - The International Monetary Fund views Wednesday's Federal Reserve interest rate cut and adoption of a more cautious outlook as appropriate given high U.S. economic uncertainty, IMF spokesperson Julie Kozack said on Thursday.

"Data from the last few months shows that the labor market continues to cool at the same time that inflation has been somewhat higher than expected, but still trending down toward the target," Kozack told a regular news briefing. "So with this background, we see the Fed's action as appropriate." (Reporting by David Lawder; Editing by Chizu Nomiyama)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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