IMF says Federal Reserve has scope to lower interest rates

The International Monetary Fund on Thursday said the Federal Reserve has scope to lower interest rates because of the weakening U.S. labor market, but the central bank should move cautiously with a close eye on emerging economic data.

"Our overall sense is that, given the downside risks to full employment, there is scope for the Fed to begin to lower policy rates," IMF spokeswoman Julie Kozack said in a regular briefing.

"We also would say that the Fed should proceed cautiously, of course in a data-dependent way, in the coming months." The Fed is expected to lower its benchmark interest rate by a quarter of a percentage point at a policy meeting next week.