IMF Defends Rate Hikes After Donald Trump Comments On US Federal Reserve

Oscar PerryOct 11, 2018

"However, it is projected to rise to 5.1 percent in 2019", the report said.

Further moves towards a trade war could "significantly harm global growth". "The rapid pace of growth in household debt, which is now at the high end for emerging markets, also raises concerns".

The People's Bank of China (PBOC) has lowered the amount of money banks must set aside as reserves, known as the reserve requirement ratio, four times this year to ensure adequate liquidity in the financial system to support the economy.

"There are quite a few countries facing high levels of debt, they are either in debt distress or they are already having serious problems of managing their debt".

"We are seeing more and more countries, including China, let their currencies fluctuate", she said. The situation is getting more and more serious as a result of the US$2 billion secret loans from Credit Suisse and Russian lender VTB for the purchase of naval equipment and a fishing fleet that were backed by Mozambique's financial minister without parliamentary approval.

"But even across emerging markets, we see a lot of differentiation". "I just say they're not ready yet".

That has also increased fears that the terms of any International Monetary Fund programme could be more restrictive than in the past, undercutting Khan's welfare drive.

Given the funding gap of USD8-10b, the government will also need to build up foreign exchange reserves by issuing Euro/Overseas bonds (USD2-3bn) and seeking support from friendly countries.

US And Chinese Warships Almost Collide In South China Sea
Chinese officials confirmed it sent the Luoyang to drive the USS Decatur away and urged the stop its "provocative" actions. Navy characterized as " unsafe and unprofessional" comes at a time of heightened tensions between the United States and China.

"Support for multilateralism has been waning, a risky undercurrent that may undermine confidence in policymakers' ability to respond to future crises".

More tariffs and their countermeasures "could lead to a broader tightening of financial conditions, with negative implications for the global economy and financial stability", the fund warned.

The American economy has been performing strongly, encouraging global investors to move capital there and invest in the dollar.

International Monetary Fund chief Christine Lagarde on Thursday (Oct 11) defended central bank rate hikes in a veiled rebuke to Donald Trump after the USA president blamed "crazy" Fed policies for contributing to financial market turmoil.

But higher United States interest rates have also helped send emerging market currencies into a tailspin, as countries that borrowed heavily in dollars race to pay back debt.

The rupiah has indeed been under strong downward pressure, especially over the last three months, as a result of monetary tightening and stronger economic growth in the U.S., which has caused higher capital outflows, and the upward trend in global oil prices, which has increased Indonesia's trade deficit and consequently the current account deficit to more than 2.5 percent of gross domestic product (GDP).

That would be "of a magnitude" similar to the financial crisis.

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