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.
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.