The International Monetary Fund anticipates obstacles on the road to achieving lower inflation.

• The IMF's latest World Economic Outlook report indicates that the global disinflation trend is slowing down, indicating potential obstacles ahead.
• Earlier in 2024, the U.S. experienced a rise in sequential inflation, which has caused it to fall behind other major economies in the quantitative easing path, according to a report.

The possibility of multiple Federal Reserve interest rate cuts this year is uncertain due to increased upside risks to inflation, as stated by the International Monetary Fund on Tuesday.

The IMF's latest World Economic Outlook update stated that the global disinflation momentum is slowing, indicating potential obstacles ahead. The report noted that the U.S.'s sequential inflation increase earlier in 2024 has put it behind other major economies in the quantitative easing process.

The Fed rate cut in September is anticipated by traders, as per the CME Group's FedWatch tool, with a 100% chance of lower rates at the Sept. 18 meeting. Additionally, traders expect another rate decrease in November.

Pierre-Olivier Gourinchas, the IMF chief economist, stated on Tuesday that the Fed should only make one rate cut this year due to the challenges of services and wage inflation.

Gourinchas stated that, although the strong wages and service inflation are not a cause for concern, they are issues that need to be addressed in the future for the U.S. economy. His remarks were made following the U.S. Labor Department's announcement that the consumer price index grew last month at its slowest rate since April 2021.

Although the CPI report was positive, Gourinchas warned that the increase in inflation earlier in the year suggests that the journey towards lower inflation and interest rate cuts may take longer than the markets anticipate.

Gourinchas stated that there could be one or two cuts in the latter part of the year, possibly in 2024, with the rest of 2025 remaining unchanged.

In 2024 and 2025, the IMF predicts that the rate of disinflation will decrease in advanced economies worldwide due to high inflation in services and commodity prices.

The financial institution revised its forecast for the U.S. economy, predicting a 0.1 percentage point decrease in growth to 2.6% in 2024 due to weakening consumption and sluggish growth at the beginning of the year.