The International Monetary Fund (IMF) managing director predicts that the Federal Reserve (Fed) may begin reducing interest rates by the end of 2024.

According to Kristalina Georgieva, managing director of the International Monetary Fund, the Federal Reserve should be able to start cutting interest rates by the end of 2024.

"According to Georgieva, we anticipate that the Fed will be able to lower interest rates by the end of the year. However, she advised waiting for the data to confirm this before taking any action."

Georgieva's comments were prompted by recent inflation data, which exceeded the 2% target, and have heightened concerns that the central bank may not lower rates as soon as anticipated. According to the CME FedWatch Tool, the first rate cut is predicted to occur in September based on Fed funds futures pricing data.

Since the start of April, the benchmark in the U.S. stock market has fallen nearly 2% due to those fears.

Wholesale prices increased by 0.2% in March, slightly below the forecast of economists surveyed by Dow Jones. This was revealed on Thursday. On Wednesday, it was reported that consumer prices rose more than anticipated, marking an increase in inflation.

Georgieva advised that the Fed should keep monitoring economic data to determine when it's time to lower interest rates.

The former World Bank CEO stated that people should be optimistic about the future of the United States because the country does not experience as much upward pressure on labor costs compared to other places. Additionally, Georgieva said that the U.S. government can play a larger role in regulating the economy and preventing it from overheating, which is another reason for optimism on the country's financial health.

Georgieva cautioned that prolonging interest rates beyond anticipated timeframes may pose risks to global financial stability. Additionally, she stated that international central banks would be less likely to align with the U.S. Fed's course as circumstances differ.

"Georgieva stated that although inflation is decreasing, it has not yet reached the desired level."