IMF cuts US growth outlook, says full employment years off

Lowers 2014 forecast to 2% from 2.8% predicted in April

The International Monetary Fund cut its growth forecast for the United States on Monday and said the economy would not reach full employment until the end of 2017, allowing interest rates to be held near zero for longer than financial markets expect.

In its annual health check of the US economy, the IMF cut its 2014 forecast to 2 per cent from the 2.8 per cent it predicted in April, due to a weak first quarter. It kept its 2015 forecast unchanged at 3 per cent, as job creation picks up after a harsh winter.

"Recent data ... suggest a meaningful rebound in activity is now underway and growth for the remainder of this year and 2015 should well exceed potential," the IMF said.

Yet the country's potential growth should only be around 2 per cent going forward, below historical averages, as the population ages and productivity growth slows, it added.