Jackson Hole, WY, United States (4E) – International Monetary Fund (IMF) Managing Director Christine Lagarde said Friday that the extraordinary levels of monetary stimulus employed by the world’s major central banks had boosted their respective economies, and now steps must be taken to prepare these economies after these policies are scaled back.
The leader of the IMF called on policy makers to work together with their expected exit plans from unconventional monetary policies, saying that they could use alternative tools like swap arrangements between central banks to help them tackle instability.
In the annual Fed conference in Jackson Hole, Wyoming, Lagarde said that despite there is no agreement on the effect by the policies of central banks like the U.S. Federal Reserve or the Bank of Japan, officials still need to consider the potential spillovers.
Ms. Lagarde warned that if reducing the stimulus could restart financial turmoil, it is possible that some countries may be able to withstand it. She suggests that policy makers should not rush to exit, saying that Europe could gain further from the unconventional policy while Japan is not likely to exit very soon.
Ms. Lagarde’s remarks come as many Fed officials are considering slowing down the pace of its $85bn-a-month bond buying program.