IMF urges central banks to maintain stimulus packages for emerging economies
Her comments come as the Fed is signalling that it could slow its bond purchases later this year if the U.S. economy continues to improve.
Click here to add Ben Bernanke as an alert
Disable alert for Ben Bernanke,
Click here to add Christine Lagarde as an alert
Disable alert for Christine Lagarde,
Click here to add Dennis Lockhart as an alert
Disable alert for Dennis Lockhart,
Click here to add Federal Reserve Bank of Atlanta as an alert
Disable alert for Federal Reserve Bank of At ...,
Click here to add G-20 as an alert
Disable alert for G-20,
Click here to add Group of 20 countries as an alert
Disable alert for Group of 20 countries,
Click here to add International Monetary Fund as an alert
Disable alert for International Monetary Fund,
Click here to add Jackson Hole as an alert
Disable alert for Jackson Hole,
Click here to add James Bullard as an alert
Disable alert for James Bullard,
Click here to add Kansas City Federal Reserve Bank as an alert
Disable alert for Kansas City Federal Reserv ...,
Click here to add St. Petersburg as an alert
Disable alert for St. Petersburg,
Click here to add US Federal Reserve as an alert
Disable alert for US Federal Reserve
The head of the International Monetary Fund has cautioned the world's major central banks not to withdraw their unconventional support for weak economies too soon. IMF Managing Director Christine Lagarde said stimulative policies are still needed in key regions, especially Europe and Japan, which have struggled with prolonged weakness. She spoke at an annual economics conference in Jackson Hole, Wyo., sponsored by the Kansas City Federal Reserve Bank. Lagarde said central banks must carefully develop strategies for scaling back their efforts to keep borrowing rates low. Any pullback should be determined by the strength of individual economies, she said. Her comments come as the Fed is signalling that it could slow its bond purchases later this year if the U.S. economy continues to improve. The Fed's bond buying has helped keep U.S. interest rates near record lows. “Unconventional monetary policy is still needed in all places it is being used, albeit longer for some than for others,“ Lagarde said in her speech to the conference. The anticipation of a slowdown in Fed bond buying has unsettled U.S. stock and bond markets and sent interest rates up. Rising U.S. rates have, in turn, triggered turmoil in some emerging economies, such as Turkey, India and Indonesia.
Officials in those countries have tried to halt declines in the value of their currencies as investors have shifted money into higher-yielding investments elsewhere. Lagarde noted the market declines that have followed Fed Chairman Ben Bernanke's signal in June that the Fed could begin slowing its bond purchases later this year if the U.S.
But comments from Fed officials at Jackson Hole suggested some disagreement within the central bank over the proper timing for a slowdown to begin. Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, suggested in an interview with CNBC that he might be ready to endorse a bond-buying slowdown in September. But James Bullard, president of the St. Louis Fed, said he thought the economy remains too uncertain for a pullback next month. “I don't think we have to be in any hurry,“ Bullard said. “I think we want to take our time and assess what is going on.“ In a separate interview, Bullard said the decision on whether to start tapering could well come into focus just a few days before the September 17-18 meeting if Fed Chairman Ben Bernanke decides at that time to provide the other policymakers with a recommendation. “That's probably the kind of thing that it would come down to just a few days before the meeting, he'd kind of lay out some options,“ Bullard said in an interview with Fox Business News. Bullard is a voting member of the Fed's interest rate panel this year. Lockhart takes part in discussions but doesn't have a vote this year. Their remarks mirrored the divided opinion that was evident in the minutes of the Fed's July meeting released this week. In her speech, Lagarde said the support being provided by major central banks is buying time for nations to implement key economic reforms. “Push ahead with deeper reforms to lay the foundation for durable and lasting growth,“ Lagarde said. “Do not waste the space provided by unconventional monetary policies.“ For example, she said troubled nations in Europe must repair their financial systems before credit can start flowing normally again. Lagarde said some emerging market countries have taken steps to prepare for the shocks that could occur as the United States and other major economies withdraw their extraordinary support and borrowing rates rise to historically normal levels. But she said more work would be needed. She said the IMF will provide support where possible, including emergency loans to countries that need them. After her speech, Lagarde said she hoped leaders of the Group of 20 major economies will seek to complete financial reforms that have been drafted to try to avoid another crisis like the one that erupted in 2008. The G-20 leaders will meet next month in St. Petersburg, Russia. “As the level of the crisis has abated, the level of urgency has waned a bit,“ Lagarde said in response to a question.
- Al Tayer bucks the US department store trend with Bloomingdale's Kuwait opening
- Gulf Islamic banks set to outperform conventional banks for second year: Moody's
- Jordan secures EU finance for socioeconomic and environmental programs
- Same-day service deliveries in GCC an untapped market: Wing CEO
- Will terror attacks damper Arabs' appetite for European holidays?
- Emerging economies must control credit flows to maintain monetary policy- says study
- Mexican President Urges Japan to Take Steps for FTA
- Lebanon to direct resentment of Syrian refugees towards $1 billion fiscal stimulus package in 2015
- G 20 Statement Light on Details for Promise to Boost Regulation, Stimulus and IMF Support
- Iran: Our package has the key for regional and international peace