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The International Monetary Fund warned on Thursday that the huge US budget deficit is fueling inflation and poses major risks to the global economy.
According to a report issued by the International Foundation, “The US budget deficit is expected to reach 7.1% next year, more than 3 times the levels of budget deficits in other advanced economies.”
The report added, “The US deficit contributed to an increase in core inflation by 0.5%, that is, an increase in the inflation index, without taking into account the prices of energy resources and their products.”
The Fund noted, “It is necessary for interest rates in the United States to remain at a high level for a longer period, so that inflation can return to the target level of 2%.”
Earlier, the chief economist of the International Monetary Fund, Pierre-Olivier Gourincha, said: “The financial situation of the United States is of particular concern, as it “creates short-term risks to the process of slowing inflation and long-term risks to the financial and tax stability of the global economy.”
Data issued by the Treasury Department, earlier this month, revealed that “the US budget deficit exceeded one trillion dollars in the first six months of the fiscal year, paid in part by the rise in interest on public debt.”