Global Policy MakersTurns to Unconventional Means to Lay Fondation for Lasting Growth – IMF

The global policy makers have used unconventional monetary policies (UMP) to buy the time and space to carry out reforms needed to lay the foundation for a lasting growth. The Managing Director of the International Monetary Fund (IMF), Christian Lagarde stated this at the Jackson Hole Economic Symposium in the United States (U.S.). She noted that these policies, such as, the purchase of assets by the central banks to support financial stability and boost activity have lifted the global economy out of the depths of the financial crisis. Lagarde, however, called for policy makers to use this time wisely. 
The IMF boss said, there is a need for policy makers to work better together to take into account more fully the impact of these unconventional policies, local and global, and how that affects the path of exit. She added that, all countries need to take into consideration the full range of actions needed to restore growth and stability.
The IMF’s assessment is that the impact of the UMP so far has been positive. FSDH said, on balance, all countries benefited from lessened risks of financial turmoil, then from increased growth. The estimate of the IMF suggests that the quantitative easing, the purchase of assets by the U.S. Federal Reserve, boosted the world output by more than one percent. However, for the unwinding of UMP, the IMF Chief emphasized that the path to exit will and should depend on the pace of economic recovery. She added that there is a need to focus on how best to balance the need for stability and risk taking. She noted that long periods of very loose monetary policy and very low interest rates mixed with the hunt for higher yields could prove to be a recipe for unhealthy risk-taking. On the other hand, if unconventional monetary policies had not been implemented, the result might have been lower growth and greater risk of financial distress.

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