IMF chief says there's no significant slowdown in lending and the Fed may need to do more

The International Monetary Fund has yet to spot capable banks pulling backmost connected lending that would origin the U.S. Federal Reserve to alteration people with its rate-hiking cycle.

"We don't yet spot a important slowdown successful lending. There is some, but not connected the standard that would pb to the Fed stepping back," the IMF's Managing Director Kristalina Georgieva told CNBC's Karen Tso Saturday successful Dubrovnik, Croatia.

The Federal Reserve successful a May banks report warned that lenders are disquieted astir conditions ahead, arsenic trouble successful mid-sized fiscal institutions successful the U.S. caused banks to tighten lending standards for households and businesses.

The Fed's indebtedness officers added that they expect the issues to proceed implicit the adjacent twelvemonth owed to lowered maturation forecasts and concerns implicit deposit outflows and reduced tolerance for risk.

Georgieva told CNBC: "I cannot accent capable that we are successful an exceptionally uncertain environment. Therefore wage attraction to trends and beryllium agile, adjusting — should the trends change."

The IMF's commentary connected the gait of a slowdown successful planetary lending comes aft its Chief Economist Pierre-Olivier Gourinchas told CNBC successful April that banks are present situated successful a "more precarious situation" that would airs a hazard to the planetary organization's satellite maturation forecast of 2.8% for this year.

A bulk of large planetary cardinal banks, including the U.S. Federal Reserve, person tightened their monetary argumentation aggressively to tame soaring inflation. Meanwhile, the world's planetary indebtedness has swelled to a near-record precocious of $305 trillion, according to the Institute of International Finance. The IIF said successful its May study that precocious indebtedness levels and involvement rates person led to further concerns astir leverage successful the fiscal system.

As the IMF is yet to spot a important slowdown successful lending that would punctual the Fed to reverse its course, Georgieva said that combined with a resilient U.S. jobs report connected Friday, that it could hike further.

"The unit that comes from incomes going up and successful unemployment being inactive very, precise low, means that the Fed volition person to enactment the people and possibly successful our view, they whitethorn request to bash a small spot more," she said.

She projected the U.S. unemployment complaint to spell beyond 4%, up to 4.5%, from much complaint hikes by the Fed aft the complaint roseate to 3.7% successful May, marking the highest since October 2022.

On the U.S. authorities passing a indebtedness ceiling bill that was signed by President Joe Biden implicit the weekend, she said: "what has been agreed, successful the discourse [that] it was agreed, is broadly speaking, a bully outcome."

"Where the occupation lies is that repetitive statement astir the indebtedness ceiling, successful our view, is not precise helpful. There is abstraction to rethink however to spell astir it," she added.

— CNBC's Jeff Cox, Elliot Smith contributed to this report