The International Monetary Fund’s Executive Board concluded its Article IV consultation for the United States, welcoming strong 2025 performance but warning that persistent fiscal deficits, policy uncertainty and upside inflation risks leave limited scope for further interest rate cuts and increase financial stability tail risks. Directors urged a frontloaded fiscal adjustment and called for tighter oversight of financial-sector vulnerabilities, including nonbank intermediation and digital assets, while keeping bank regulation consistent with international minimum standards. Growth reached 2 percent in 2025, inflation was broadly flat as tariffs lifted goods prices while services inflation eased, and the federal fiscal deficit narrowed to 5.9 percent of GDP, while general government gross debt rose to 123.9 percent of GDP and the current account deficit remained large at 3.7 percent of GDP. GDP growth is projected at 2.4 percent in 2026 (q4/q4), with core PCE inflation expected to return to 2 percent in the first half of 2027 as tariff effects fade and oil prices decline, although energy prices and global commodity risks were flagged as key upside risks. Directors cautioned that, with the federal funds rate close to neutral, easing in 2026 would be appropriate only if labour market prospects materially deteriorate alongside declining inflation pressures. On fiscal policy, the consultation highlighted expectations that the general government deficit remains in the 7–7.5 percent of GDP range and debt exceeds 140 percent of GDP by 2031, and noted concerns about the growing share of short-maturity debt and spillovers via the U.S. Treasury market. Directors also criticised the shift in trade policy, noting higher tariffs and trade uncertainty are expected to weigh on U.S. activity and generate negative spillovers, and they agreed with staff that the external position is moderately weaker than implied by fundamentals and desirable policies. Directors recommended strengthening financial system oversight amid elevated asset valuations and limited visibility into nonbank financial intermediation, taking a cautious approach to any further reductions in bank capital, fully implementing the final components of Basel III, increasing requirements for mid-sized banks, and enhancing supervisory practices. They welcomed legislation clarifying regulatory treatment of stablecoins and other crypto-assets and encouraged implementation of a comprehensive regulatory and supervisory framework for digital assets, and they encouraged U.S. authorities to use the upcoming Financial Sector Assessment Program to assess financial oversight and systemic risk sources.
International Monetary Fund 2026-04-02
International Monetary Fund completes United States Article IV consultation and calls for frontloaded fiscal adjustment and stronger financial oversight
The IMF Executive Board concluded its Article IV consultation for the United States, welcoming solid 2025 growth but warning that persistent fiscal deficits, policy uncertainty and upside inflation risks limit scope for further monetary easing and heighten financial stability tail risks. Directors urged frontloaded fiscal adjustment, criticised higher tariffs and trade uncertainty, and highlighted rising debt and rollover risks. They called for stronger financial oversight, including full Basel III implementation, higher requirements for mid-sized banks, closer monitoring of nonbank intermediation and digital assets, and using the forthcoming Financial Sector Assessment Program to assess systemic risks.