Business

IMF's Lagarde urges caution over withdrawing stimulus

  • 23 August 2013
  • From the section Business
Christine Lagarde, file pic
Image caption Christine Lagarde fears an early exit from some stimulus measures will create market turbulence

The head of the International Monetary Fund has warned central banks not to end their stimulus measures too soon.

Christine Lagarde said stimulus policies were still needed in some regions, especially Europe and Japan.

With signs that the global economy is improving, there has been much debate about when supportive policies should be wound down.

But, in a speech in the US, Ms Lagarde said she did not suggest a "rush to the exit" as some economies remain fragile.

The US Federal Reserve has signalled it may slow down its huge monthly bond buying programme, a suggestion that has hit stock markets and currencies around the world.

But Ms Lagarde said stimulative measures had been successful and were still necessary in key economies.

Any withdrawal should be determined by the strength of individual economies, she said.

"Unconventional monetary policy is still needed in all places it is being used, albeit longer for some than for others,'' Ms Lagarde said in her speech to a conference in Jackson Hole, Wyoming.

She said finance officials should prepare contingency plans in case market turbulence worsened.

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,'' Ms Lagarde said. "Do not waste the space provided by unconventional monetary policies.''

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