A tapering of U.S. monetary policy is both predictable and unavoidable, Angel Gurría, secretary-general at the Organisation for Economic Co-operation and Development said on Friday.
“We have been saying that tapering was predictable and unavoidable and a good thing as it means normality is creeping back into proceedings,” Gurría told CNBC on the side lines of a conference in Sydney before this weekend’s G-20 meeting of world finance ministers and central bankers.
Markets in major developing countries such as Argentina, Brazil, Turkey and India have been hit by brutal selling – first in May and June last year and again at the start of the year – amid jitters about the impact of an unwinding of the U.S. Federal Reserve’s asset-purchase program.
Gurría said that markets were more orderly now compared with when the Fed taper talk emerged last year.
“The only thing [about tapering] is that it’s like coming off steroids,” he said. “When Ben Bernanke in May announced this we had turbulence, now we have a bit more order [although] some of the turbulence is not about tapering.”
The Fed scaled back its $85 billion-a-month stimulus program by $10 billion in December and by a further $10 billion in January. The central bank turned to an ultra-easy monetary policy in 2008 to help lift the boost economic growth at a time when interest rates had already been slashed to historic lows.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.