The world needs to adjust to the Federal Reserve’s tapering, Australian Treasurer Joe Hockey said, backing a stimulus reduction by the U.S. that sparked market turmoil and emergency measures in some emerging markets.
“It’s not something that hasn’t been foreshadowed,” Hockey said in an interview in Canberra yesterday. “The world can no longer rely on methadone every day. Sooner or later we need to wean ourselves off and that’s what tapering is about.”
Policy makers in developing markets including Turkey and South Africa have been forced into emergency steps as investors sold off currencies, stocks and bonds after the Fed’s decision to scale back asset purchases. Hockey, whose government’s role as host of the Group of 20 nations this year starts with the finance ministers’ and central bankers’ meeting in Sydney on Feb. 22-23, said the Fed was within its rights to cut stimulus.