WASHINGTON: The International Monetary Fund has called on the US Federal Reserve to put off its planned interest rate increase until 2016.

The Fed “should remain data-dependent and defer its first increase in policy rates until there are greater signs of wage or price inflation than are currently evident,” the IMF said in a new report on the US economy.

The recommendation came as an IMF team cut its US growth forecast to 2.5 percent in an annual report on the economy, blaming the unexpected first-quarter downturn.

The Fed has been edging toward a rate hike as early as June or July, but the Fund said the US economy would not be ready for it until early next year.

“Based on the mission’s macroeconomic forecast, and barring upside surprises to growth and inflation, this would put lift-off into the first half of 2016.”

In related developments, US nonfarm productivity fell more sharply than initially thought in the first quarter, leading to a jump in labor-related production costs, a trend that could ignite inflation if sustained.

Other data on Thursday showed the labor market tightening, with first-time applications for unemployment aid falling last week and the number of people on benefit rolls hitting the lowest level since 2000.

The reports likely keep the Federal Reserve on track to raise interest rates later this year.

“It’s not our base case, but should productivity growth remain muted, this would increase the risk for a more rapid pickup in inflation and potentially require a faster hiking cycle than the Fed currently foresees,” said Michael Hanson, an economist at Bank of America Merrill Lynch in New York.

Productivity fell at a 3.1 percent annual rate instead of the previously reported 1.9 percent pace, marking the first back-to-back fall since 2006, the Labor Department said. It rose only 0.3 percent from a year ago.

According to JPMorgan, productivity was up a meager 0.6 percent annualized over the past five years, the worst five-year run since the early 1980s and the worst five-year performance on record outside of a recession.

US financial markets were largely unmoved by the data as investors focused on a global bond sell-off.