IMF cuts forecast for US growth

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The International Monetary Fund has urged the US Federal Reserve to keep interest rates lower for longer after downgrading its forecast for the country's growth rate.

The international body has cut its April forecast of 2.8% growth for 2014 down to 2%. It blamed a harsh winter, as well as a still-struggling housing market, for the weak first quarter figures which have already been seen. However, it expects growth to rise to 3% in 2015.

The IMF also urged the US Fed to keep interest rates lower for longer, despite growing expectations of a hike.

It said the country could tolerate a modest rise in inflation, adding this may also be in keeping with a balanced policy.

The IMF urged policymakers to encourage higher productivity and job-creation, which in turn may make a withdrawal of the stimulus easier: "This would be the best policy mix from an economic perspective but, regrettably, political agreement on such an approach remains elusive."

Other issues identified by the organisation include the 15% poverty rate, the still-limited availability of mortgages and the complex taxation system.

It also called on the US to raise the minimum wage, which is low by international standards.

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