Trichet to Fed: Ignore the IMF, World Bank

With just two days to go for the Federal Reserve’s highly anticipated interest rate decision, former European Central Bank (ECB) President Jean-Claude Trichet has a message for chair Janet Yellen – ignore the International Monetary Fund (IMF) and World Bank’s warnings around the dangers of monetary tightening and keep all options on the table.

“The Fed has to be independent of the self-appointed good advisers,” Trichet told CNBC on Tuesday. “It is part of the credibility of the monetary policy.”

In early September, both the World Bank and the IMF cautioned the U.S. central bank against raising rates until the world economy was on a surer footing. Their warnings followed a summer of turmoil in global markets, triggered by jitters over China’s deteriorating economic outlook and the prospect of higher borrowing costs in the world’s largest economy.

“They can give good advice on a more medium term basis, but not on a precise decision at a certain moment,” Trichet said. “I really think it is not their mandate, to do that.”

If the Fed does decide with “lift-off” this week, it shouldn’t catch anyone off guard, he added.

“They were, in my opinion, very clear in warning the market that an increase of rates was likely, so nobody would say in the market that they were not warned in advance.”


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.