WASHINGTON: Global finance chiefs stepped up calls for the Federal Reserve to take care in moving to cut its stimulus, as emerging countries wrestle with financial turbulence.
Numerous countries at the annual meeting of the International Monetary Fund and the World Bank said the US central bank’s expected tightening had already added challenges to their struggling economies, stirring capital outflows and pressing their currencies lower.
The IMF’s steering committee, the International Monetary and Financial Committee, itself cautioned the Fed and other central banks in advanced economies when they begin “normalizing” their ultra-low interest rates and easy-money policies.
“The eventual transition toward the normalization of monetary policy... should be well-timed, carefully calibrated, and clearly communicated,” the IMFC said.
Others were more frank, after struggling with the consequences of a surge in interest rates in the five months since the Fed signaled it was close to “tapering” its $85 billion a month asset-purchase program.
Africa’s IMF and World Bank representatives said they were “worried about uncertainty” arising from the pullback from so-called unconventional monetary policies—which have flooded cheap dollars, euros and yen onto the global economy for some five years.
Russian Finance Minister Anton Siluanov said he expects only more turmoil in the markets when the Fed moves.
“The assumption that the asset-price correction that began this summer has already been largely completed does not seem to be plausible to us,” he told the IMFC.
“Even the first hint on the exit from unconventional monetary policies in advanced economies has already led to many difficulties for emerging-market economies.”