OECD Secretary Says Fed Tapering Unavoidable and Predictable

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.

via CNBC

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