WASHINGTON—The International Monetary Fund on Thursday slashed its forecasts for U.S. economic growth, calling for the Federal Reserve to hold off its first rate increase in nearly a decade until 2016.

In its annual review of the U.S. economy, the IMF said a series of negative shocks, including a strong dollar and bad weather, had sapped momentum for job creation and expansion, prompting a downgrade to its growth expectations to 2.5% for the year. Its last estimate in April was for a 3.1% expansion.

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