IMF Warns Central Banks About Raising Rates Too Soon

The International Monetary Fund has warned the world’s biggest economies against raising interest rates too soon. There are still too many risks to global growth, the fund said. Advanced economies should continue to pursue “growth supportive policies.”

The warning came in a letter to central bankers and finance ministers of the G-20 group of leading economies, who are meeting in Turkey this week.

Higher interest rates could damage the already fragile economic recovery.

“Monetary policy must stay accommodative to prevent real interest rates from rising prematurely,” the IMF said. In other words, rates should rise later rather than sooner.

As expected, the European Central Bank kept interest rates at record lows when it met on Thursday.

The global economy has been hit by a slowdown in emerging markets, lower demand from China, weak commodities prices, and a sluggish recovery in the world’s most advanced economies. Data show that global growth in the first half of 2015 was weaker than in the second half of 2014, the IMF said.

via CNN

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