December 21, 2015
IMF warns of world economic crash if interest rates are not kept low
By Jigmey Bhutia
October 11, 2015 09:48 BST
The International Monetary Fund (IMF) has warned that the world economy - which is growing at 3.1% compared to 3.4% last year - could crash if central banks do not continue with their low interest rates. The IMF said uncertainty and financial market volatility have increased and medium-term growth prospects weakened.
"In many advanced economies, the main risk remains a decline of already low growth, particularly if global demand falters further and supply constraints are not removed," IMF managing director Christine Lagarde said. This should be supported by "continued monetary policies, and improved financial stability", she said.
She warned that when the UK and US central banks increase interest rates which spill over into volatile financial markets, then it will pose a challenge to stabilise the economy. Lagarde also urged Japan and the eurozone to maintain their quantitative easing programmes to stimulate their economies.
After the IMF's warning , the G30 group of experts which includes former central bank governors, in a report said keeping the interest rates low for long would lead to a financial crisis. They added it would also lead to rising debt besides encouraging excessive risk-taking.
She warned that when the UK and US central banks increase interest rates which spill over into volatile financial markets, then it will pose a challenge to stabilise the economy. Lagarde also urged Japan and the eurozone to maintain their quantitative easing programmes to stimulate their economies.
After the IMF's warning , the G30 group of experts which includes former central bank governors, in a report said keeping the interest rates low for long would lead to a financial crisis. They added it would also lead to rising debt besides encouraging excessive risk-taking.
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http://www.ibtimes.co.uk/imf-warns-world-economic-crash-if-interest-rates-are-not-kept-low-1523448
