IMF: US needs to raise minimum wage

The International Monetary Fund released its annual review of the U.S. economy on Monday and called on the US to raise its federal minimum wage rate.

The IMF described the US minimum wage as low by both historical and international standards, saying that an increase would raise incomes for millions of working poor Americans.

The IMF also lowered its US gross domestic product growth forecast to two percent for this year. For 2015, it maintained a forecast of 3 percent.

At a news conference, IMF Managing Director Christine Lagarde said the contraction of US growth in the first quarter occurred due to a harsh winter but that the weak growth is temporary.

"Extreme weather occurrences have a serious effect on the economy," Lagarde said. "And extreme weather occurrences have repeated much more frequently in the last 20 years than they had in the previous century. And I think that's a valid reason to wonder about climate change, and how to deal with it."

The IMF estimated the US will reach full employment by 2017, adding that inflationary pressures will remain muted and the Federal Reserve policy rate could remain at zero longer than mid-2015.

This marks the first time that the IMF has endorsed raising the US minimum wage. It comes amid increased discussion on Capitol Hill about hiking it with calls from US President Barack Obama and some Democrats for a jump to $10.10 per hour.

Currently, the US federal minimum wage stands at $7.25 per hour, but 22 states and the District of Columbia have higher minimum rates.

Reuters contributed to this post.