Wednesday, January 29th 2014 - 20:31 UTC

Lagarde admits volatility in global markets as strong economies tighten monetary policy

Monetary policy tightening in advanced economies will cause volatility in international markets this year and impact the monetary situation of some emerging economies, IMF Managing Director Christine Lagarde cautioned on Wednesday.

However the outlook for the global economy looked 'generally positive' said the IMF head (Photo AP)

 Lagarde, speaking by video link to an investment conference in Ivory Coast, said the outlook for the global economy looked generally positive, with advanced economies set to continue their economic recovery in 2014.

Fast-growing economies such as China and India would also post a solid performance, she said, noting that the IMF recently raised its forecast for global economic growth this year to 3.7%.

With the start of the US Federal Reserve's unwinding of quantitative easing already jolting emerging markets, Lagarde admitted that tightening by Western central banks would have an impact this year.

“We think that in 2014, the monetary policy of central banks in advanced economies will induce ... volatility in international markets and in the monetary situation of certain emerging economies,” she said from Paris.

The IMF chief said the impact would differ between “solid emerging countries which have room for maneuver and those which have not yet built this margin nor introduced a series of economic and budgetary measures.”

Emerging markets have witnessed a selloff in recent days amid concerns that tightening would strain emerging economies reliant on foreign capital flows. Turkey's central bank was forced to hike interest rates overnight to stem capital flight.

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1 Britworker (#) Jan 29th, 2014 - 08:58 pm Report abuse
In other words the money is on the move. As the advanced economies recover and grow, currencies will fall in emerging economies, increasing inflation. Not good news for Argentina as if it needed any more bad news.

“What will concern them is that their fate rests to an extent in the hands of a massively powerful financial institution, the US Federal Reserve, over which they have no influence and which has no responsibility to take account of their needs.”

www.bbc.co.uk/news/business-25942239
2 CabezaDura2 (#) Jan 29th, 2014 - 08:59 pm Report abuse
The party of cheap money in the world is not over but the tendency is reverting and the booze is starting to run out and the people are leaving.... Bolivia and Argentina should become efficient and do the painful changes that need to be done urgently and abandon populism and corruption for good... Why is it that the worst ever government of Argentina had by chance the coincidence of existing during best international context in more than 100 years?? 900.000 million USD that came into the Argentine state coffers in the last 10 years, ALL GONE
3 ilsen (#) Jan 29th, 2014 - 11:38 pm Report abuse
@”2 CD2

Your comment is the most sensible one I have read for a time.
Thank you.

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