|
Headlines
Market news and breaking stories live from Dow Jones Newswires
Market Commentary
A technical analysis commentary of the major markets, only from INO
Smart Scan
A premium service, alerting you to changes in the market by web and email.
Extreme Futures / Stocks
Extreme Markets from all exchanges, updated throughout the trading day.
|
| |
|
Trade Triangle Technology, Advanced Charts, SmartScan, Trading Workshops.
The premier online video learning platform for traders.
Daily Portfolio Scan and Analysis
|
| |
|
IMF Chief: Global Economy Remains Vulnerable; Early Exit May Kill Recovery 78 days ago
(RTTNews) - Bold and rapid policy responses helped the global economy to avert the worst of the crisis, but it remains in a highly vulnerable situation, International Monetary Fund chief Dominique Strauss-Kahn said Monday. He noted that it is too early to exit stimulus measures as he fears an early exit may kill the recovery.
"The storm has passed. The worst has been averted," he said at the Confederation of British Industry annual conference in London. According to a prepared speech published on the IMF's web site, he said it is difficult to claim that the crisis is over when unemployment is at historic highs, and getting higher still. He added that the sustainability of the global recovery will depend on the decisions taken by policymakers in the months to come.
Strauss-Kahn noted that the major advanced country areas remain fragile and are still dependent on policy support. Financial conditions have improved, but are far from normal. Signs show confidence returning, but banking systems in many advanced economies remain undercapitalized, weighed down by leaden legacy assets and, increasingly, non-performing loans.
Regarding households, weak financial positions and high unemployment will damp down on consumption for some time. And large public deficits add to vulnerabilities, he explained.
Speaking on exit measures, Strauss-Kahn said, "Exit too soon, and you kill the recovery. Exit too late, and you sow the seeds for the next crisis." He noted that its too early to exit stimulus now and it should await a sustained recovery in private demand as well as entrenched financial stability.
He urged governments to reform fiscal institutions and frameworks so that adjustment can proceed smoothly when the time comes. On the monetary policy, Strauss-Kahn said interest rates can be raised before unwinding unconventional measures, and central banks have the necessary tools to re-absorb liquidity. The IMF chief added that monetary policy can afford to stay accommodative for some time in many advanced economies, but it need to move sooner in some emerging economies, which face different challenges.
On financial sector regulation, he said banks will need more capital as asset quality deteriorates. In this environment, imposing tougher standards could jeopardize the recovery. But on the other hand, in an atmosphere of increasing optimism, there are signs of old habits coming back. Risk taking is on the rise, and is manifesting in emerging markets.
He said, currently, regulatory uncertainty is throwing up some perverse incentives. "For example, it might be encouraging a risk-taking culture-a Mardi Gras effect whereby financial institutions party now in expectation of lean times to come." Strauss-Kahn warned that a delay in implementing financial sector reforms would harm the sector again.
In the UK, he said, there are some positive developments - the overall outlook has improved and there are indications that job shedding is nearing an end. Yet, Strauss-Kahn cautioned that the recovery may be somewhat subdued, held back by balance sheet adjustment by banks and households.
For comments and feedback: contact editorial@rttnews.com
Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved
< Back to News Index
|
