IMF Backs Fed's Data-Dependent Stance as Strong GDP, Rising Inflation Fuel December Rate Hike Bets

The International Monetary Fund said Thursday the Federal Reserve is "appropriately" remaining data-dependent, a day after the U.S. central bank held its benchmark overnight rate in the 3.75% to 4.00% range while noting inflation "remains elevated." IMF spokesperson Julie Kozack told reporters the Fed and the European Central Bank, which both left rates unchanged this week, are operating amid high uncertainty and must track economic data closely. She endorsed Fed Chair Kevin Warsh's focus on price stability, noting headline inflation remains above the Fed's 2% target. The Commerce Department reported Thursday that third-quarter GDP grew at its fastest pace in a year, as consumers kept spending and businesses expanded AI investment despite higher oil prices tied to the Middle East conflict. Separate data showed inflation accelerating and broadening in September. Economists said the figures strengthened the case for a December rate increase, following September's hike. Kozack said U.S. growth was supported by productivity gains, with output per hour up 2.5% annually, though she noted those gains were not widely shared.