IMF sees Fed starting rate hikes in late 2022 or early 2023

The International Monetary Fund joined those who believe that America's central bank should start hiking interest rates towards the end of 2022 or the start of 2023 amid a quick rebound in economic growth.

Policymakers on the Federal Open Market Committee predicted in June that America's gross domestic product would rebound by 7% in 2021, thanks to the unprecedented government stimulus measures approved by Congress.

That was better than the 6.4% pace that they had been anticipating just two months before.

In particular, in its annual Article IV consultations, the Fund noted that: "Managing this transition - from providing reassurance that monetary policy will continue to deliver powerful support to the economy to preparing for an eventual scaling back of asset purchases and a withdrawal of monetary accommodation - will require deft communications under a potentially tight timeline."

Nevertheless, as the Fed itself, so too the IMF projected that the recent pick up in inflation would prove transitory, meaning that the central bank could afford to look through it.

The US personal consumption expenditures price deflator had accelerated to an annual rate of 3.8% in May - its fastest clip since 2008 - to well above the Fed's long-run target of 2.0%.

More recently, in June, rate-setters on the Federal Open Market Committee had raised their forecast for PCE inflation in 2021 from a previous forecast of 2.4% to 3.1%.

But price gains were seen slowing to 2.1% in 2022 and 2.2% in 2023.

As for the Federal Reserve's asset purchase programme, the world's financial watchdog predicted that they would start to be scaled back in the first half of 2022.