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The increase in the deficit along with increasing interest rates is not a good sign for the US economy. This unprecedented expansion of debt towards the end of the economic cycle has financial experts wondering the extent of the impact created by the changes brought in by the Federal Bank.

The move has resulted in increased Federal Fund rates and ratio of debt to GDP. The ECB however has maintained that it would not increase its interest rates until the beginning of 2019 summer. The ECB is planning to phase out its proposed stimulus program towards the end of 2018. This move will be beneficial to 19 Euro using countries threatened with deep financial crisis.

IMF (International Monetary Fund) has meanwhile warned that global economy is at risk with the increasing tax cuts and hikes in public spending in the US. This financial move will result in increased debt, higher inflation and a higher dollar rate.

IMF states that the fiscal stimulus supported by the Trump government will only result in a short term economy boost for the country and its partner trading countries. But this kind of fiscal measure introduced in a growing economy can increase risk to the global and US economy.

IMF warns that the fiscal policy of the US administration can cause deprivation of capital funding in emerging markets.  IMF has predicted that while 2018 will see accelerated growth, the momentum will slow down with the increase of rates by central banks and the fading of stimulus offered by the US fiscal situation.

In a press statement, the Treasury department of the US has revealed that the short term evaluation of the situation by IMF is accurate but does not hold good for the long and medium term economic outlook. The IMF has also warned of a recession, if the increased rate cuts are not stopped.