The International Monetary Fund (IMF) cut its economic growth forecast for the US to 2.3% for 2022, citing record inflation and the Federal Reserve's aggressive moves.
The previous figure in June estimated that the US economy would expand 2.9%, which was lowered from a 3.7% growth projection.
"The rapid recovery of demand and associated depletion of slack, rising energy prices, and ongoing global supply disruptions have led to a significant acceleration in inflation," the IMF said Tuesday in its 2022 Article IV Consultation with the US.
"Wage and price pressures are broad based and have spread quickly across the economy. Longer-run measures of inflation expectations have started to drift higher and shorter horizon measures of inflation expectations have increased significantly," it said in a statement.
The IMF said the US government deficit rose nearly 9% of its GDP with $1.9 trillion due to President Joe Biden's American Rescue Plan that was passed in March 2021.
"The fiscal deficit is now declining rapidly but, despite this, public debt is markedly higher than its pre-pandemic levels and is expected to continue to rise as a share of GDP over the medium term," it said.