The Federal Reserve has space to take further stimulus measures to bolster the US economy, the International Monetary Fund said Thursday, noting the challenges facing the world's largest economy.
As part of an annual assessment, the IMF said that monetary policy would need to remain "highly accommodative for quite some time" and "that there is room for further easing should the outlook deteriorate."
The Fed on Wednesday signalled that it could take action in the future, but unveiled no new stimulus measures.
The IMF warned of the risks of very low interest rates, noting that stimulus measures could have little effect and damage the dollar.
The international body also warned of the uncertainty caused by the impending expiration of tax cuts first enacted under president George W Bush and the potential of drastic spending cuts that are set to go into effect if Congress cannot reach a deficit reduction deal.
Weaker household spending, fiscal restraint and low global demand will keep growth to a modest 2 percent in 2012 and 2.25 percent in 2013, the IMF said.
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