Mon, Oct 14, 2013 - Page 15 News List

Fed pressed to take care with stimulus pullback

‘WORRIED ABOUT UNCERTAINTY’:Global finance leaders cautioned the Fed about the dangers of a ‘disorderly’ QE wind-down and the need to engage in international dialogue

AFP, WASHINGTON

World Bank president Jim Yong Kim said that the Fed’s decision not to begin the taper last month effectively bought other countries extra time to get their houses in order.

“The decision not to decrease bond purchases by the US Fed is giving emerging markets at least a couple of months’ window,” he said. “The advice is very clear. We are very strongly urging these emerging market economies to move quickly on these reforms that we all know they have to make.”

Tombini said that is what his country has done, piling up foreign reserves and other strong buffers.However, he warned that if the Fed and others moved too fast, it could easily overshoot and depress global growth.

“If long-term real interest rates rise too steeply, the US recovery could stumble and the negative effects would be felt worldwide,” he said.

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