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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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza