The US Federal Reserve should not rush its decision to raise interest rates and should move only when it is sure the decision is unlikely to be reversed later, the head of the International Monetary Fund, Christine Lagarde, said over the weekend.
Many emerging market economies are concerned that a Fed rate rise would trigger large outflows of capital from emerging economies into dollar- denominated assets, creating market turmoil that would hurt growth.
Finance ministers and central bankers of the world’s 20 biggest economies discussed the issue thoroughly at a meeting in Ankara, Ms Lagarde told a news conference after the talks.
“It should really do it for good, if I may say,” she said. “In other words, not give it a try and have to come back.
“So, what we have said is, the IMF thinks that it is better to make sure that the data are absolutely confirmed, that there is no uncertainty, neither on the front of price stability, nor on the front of employment and unemployment, before it actually makes that move,” she said.
“And that would call for being in the curve,” Ms Lagarde added, “rather than necessarily ahead of the curve or indeed behind the curve.” – (Reuters)
