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Central Banks Must Be Careful When Tightening Policy - Imf

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http://uk.reuters.com/article/2013/10/12/uk-imf-idUKBRE99B09Q20131012

Central banks of advanced economies must try to limit collateral damage to emerging markets when the time comes to tighten monetary policy, the International Monetary Fund's steering panel said on Saturday.

The panel acknowledged that the ultra-accommodative policies first embraced by the U.S. Federal Reserve and other major central banks during the 2007-2009 crisis have supported world growth and remain appropriate.

But as growth strengthens, the shift to a more normal policy stance should be "well-timed, carefully calibrated and clearly communicated," the International Monetary and Financial Committee said in a statement.

A wave of selling spread quickly through world financial markets this year after the Federal Reserve said it could start winding down its massive stimulus program by year end.

The pain was felt most severely in developing countries as the gusher of cheap dollars that had poured into their economies dried up, sparking a sharp slide in stock prices and currencies and pushing up local interest rates.

Don't withdraw the heroin as the global addicts will all go cold turkey!

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http://uk.reuters.com/article/2013/10/12/uk-imf-idUKBRE99B09Q20131012

Don't withdraw the heroin as the global addicts will all go cold turkey!

good analogy.

but markets do what market dictates

..heroin wil be withdrawn..and there will certainly be much wailing and gnashing of teeth.

but amidst that will come a stunning realisation that the addicts actually didnt want or need the heroin in the first place.

then will come the hunt -down and systematic extermination of the dealers.

same foks who thought they would be oh so generous and give you all £20 free bet on sky donkey derbey.

after they have dealt with the bread-and-circus-merchants,then they are coming for those who thought they would monopolise on fuel/food/shelter etc.

this ain't gonna be pretty..seing as the opposition have spent the best part of 200 years trying to corner the market in life's basics.

Edited by oracle

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Central banks of advanced economies must try to limit collateral damage to emerging markets when the time comes to tighten monetary policy, the International Monetary Fund's steering panel said on Saturday

...

But as growth strengthens, the shift to a more normal policy stance should be "well-timed, carefully calibrated and clearly communicated," the International Monetary and Financial Committee said in a statement.

Some hope. As if.

Sounds destined to fail then.

Edited by billybong

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The pressure seems to be building,a question of whos going to blink first? but the fear of being fingered as the bad boy is even greater,is the U.S shut down just a chrade to justify even more printing or a way to make tapering look like it was forced ?

Edited by long time lurking

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It strikes me that in Help to buy Osbourne has created his own version of Benanke's dilemma- there will never be a good time to tell any market that the free money or support it has become dependent on is going to stop.

Interesting that people who seem so acutely aware of the dangers posed by welfare dependency seem oddly blind to exactly the same dangerous propensity in the financial and housing sectors.

The simple analogy is this- a man who struggles to walk without a cane will walk better with one- but if you then take that cane away he might just fall over-having become dependent on the support it gives him.

Neither QE in the US or Help to Buy in the UK can now be ended without unraveling whatever good they are supposed to have done.

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