U.S. must take steps to avoid fiscal cliff: IMF (by Greg Robb)

WASHINGTON (MarketWatch) - U.S. lawmakers must remove uncertainty created by the "fiscal cliff," the International Monetary Fund said in a report released Tuesday. The pace of deficit reduction in the short-term should not sap the economic recovery that is expected to remain modest over the next two years, the IMF said. Growth in the largest global economy is expected to average 2% in 2012 and 2.25% in 2013. Given this outlook, the main policy challenge for U.S. officials is to use the limited remaining ammunition in the near term and restoring fiscal stability over the medium-term. The agency said it was critical that lawmakers remove uncertainty created by the "fiscal cliff" and promptly raise the debt ceiling when needed. The Fed has room for further easing should the outlook deteriorate, the IMF said. Fundamentals suggest the dollar is modestly overvalued, the report