Lagarde calls policies a success, but warns an exit is tricky

Aug. 24, 2013 at 11:01 AM
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JACKSON HOLE, Wyo., Aug. 24 (UPI) -- So far so good -- now use the time wisely, International Monetary Fund Director Christine Lagarde told economic policy makers in Wyoming.

Lagarde's message at the Federal Reserve's annual retreat in Jackson Hole, Wyo., included positive support for the unconventional monetary policies put into place over the past five years to pull the global economy out of a recession, the IMF said in a statement released Saturday.

Lagarde said there was "no rush" needed regarding a retreat from the accommodating policies put in place, such as low bank-to-bank lending rates established by central banks and quantitative easing programs that keep lending rates low and supply liquidity in financial markets.

"One thing we can say for certain: The path to exit will and should depend on the pace of recovery," she said.

Policy makers should pay attention to local and global impact of their eventual retreat from easy money policies, she said, advising economists at the event that the policies have bought time and they should "use this time wisely" going forward.

"In Europe, for example, there is a good deal more mileage to be gained from unconventional monetary policy. In Japan, too, exit is very likely some way off," she said.

Lagarde's comments are timely for U.S. policy makers, as well. In June, Fed Chairman Ben Bernanke opened up discussions of the Fed unwinding its $85 billion per month asset purchasing program. Equity markets were jolted by the news and economists are now focused on any hint from Fed officials that they will gradually taper off or end the accommodating program.

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