IMF urges U.S. to finish tougher rules on insurers, mutual funds

'Herding Behavior'

There's evidence that "herding behavior" among U.S. mutual funds is intensifying, particularly in less liquid markets, the IMF said. A "disorderly" exit from ultra-low interest rates by the Federal Reserve could materially effect managed funds and life insurers, it said.

The IMF conducted its own "stress tests" of the 31 largest bank holding companies and found that all have sufficient capital to absorb losses, "the first time since the start of annual stress tests in 2009 that no firm fell below any key capital threshold."

At the same time, the review found risks emerging in insurance companies, and the IMF urged U.S. officials to develop and perform insurance stress tests.

Separately, in its annual assessment of the U.S. economy, the IMF reiterated its forecast from a few weeks ago that the U.S. economy will grow 2.5 percent this year, followed by 3 percent next year.

Expansion is then projected to slow to 2 percent in 2020, matching the potential growth rate "unless a broad range of structural issues are addressed to raise productivity, create incentives for innovation and capital formation, and raise labor force participation," the IMF said.

The fund also repeated its view that the Fed should hold off raising rates until the first half of 2016, when wage and price inflation are expected to pick up.