Oct 22
IMF urges vigilance on inflation
Under Category: Debt InformationWASHINGTON (AP) — The International Monetary Fund urged continued vigilance by finance ministers and central bankers to contain financial market turbulence and said it would try to determine what action to take to prevent future crises from erupting and damaging the global economy.
The IMF’s policy-setting committee also said in a statement Saturday that central banks in advanced countries, which have played a key role in containing financial market turbulence by injecting money, should focus on achieving price stability while keeping a close eye on inflation in the light of rising food and oil prices, among other factors.
cnnad_createAd("353931","http://ads.cnn.com/html.ng/site=cnn_money&cnn_money_position=220×200_ctr&cnn_ money_rollup=business_news&cnn_money_section=jobs_ and_economy&cnn_money_subsection=quigo¶ms.styl es=fs","200","220");The IMF committee meeting followed a session of the Group of 7 industrialized countries on Friday that pledged to limit the damage to the global economy caused when credit markets froze Aug. 9, triggered by troubles in the subprime U.S. mortgage market that then spread to many other kinds of debt in the U.S. and other countries.
The G-7 includes the United States, Canada, Britain, France, Germany, Italy and Japan.
With the G-7 and IMF meetings over, attention now turns to a meeting Sunday of the IMF’s sister institution, the World Bank and its policy setting committee, the first under its new president Robert Zoellick.
Zoellick, a former deputy secretary of state, trade representative and investment banker, took over from Paul Wolfowitz, a former defense secretary, who resigned in May in an ethics scandal.
Zoellick has been trying to "calm the waters" that were stirred by differences Wolfowitz had with some of the 185 member governments and the bank staff. A new strategy he has outlined would have the bank combat poverty, especially in Africa, help aid countries emerging from wars, and promote regional cooperation to combat disease and climate change.
Washington police said Saturday’s protests of the World Bank and the IMF annual meetings so far have been mostly peaceful.
That follows at least one violent incident Friday night in the upscale Georgetown neighborhood, 10 blocks east of the meeting site. Many of the delegates to the IMF and bank meetings stay at hotels in Georgetown and eat in its restaurants.
One woman was hit in the head by a thrown brick. It was unclear how badly she was injured.
In an attempt to soothe jittery markets, the IMF statement urged "continued vigilance to maintain well-functioning financial markets."
The ministers said they would continue "to work together to analyze the nature of the disturbances and consider lessons to be learned and actions needed to prevent further crises."
"The turbulence has revealed a number of problems that may be deeper than the specific episode that triggered the tensions," said Italian Economy Minister Tommaso Padoa-Schioppa, the new head of the IMF’s policy-making committee.
The head of the IMF, Spain’s Rodrigo de Rato, was optimistic despite the recent concerns about the credit market.
"The global economy is expanding from a solid foundation," he said.
The IMF statement said global economic growth was moderating amid disturbances in financial markets, but financial growth in countries with fast-growing economies and "strong fundamentals" continue to support the world economy.
Ministers said the financial innovation that led to the packaging of securities based on subprime mortgages in the U.S. "while having contributed to enhanced risk diversification and improved market efficiency have also created some new challenges that need to be properly addressed."
Padoa-Schioppa said that some of the institutions involved in the packaging needed to be monitored.
"There is a clear need for supervisory audits even for the great financial institutions that create these instruments, to understand better what their creations are doing out on the market. This is clearly a reason for concern," he said.
Padoa-Schioppa paid tribute to de Rato, thanking for his leadership over the past 3 1/2 years. He is leaving Oct. 31 and will be replaced by France’s Dominique Strauss-Kahn.
The IMF’s policy-setting committee also said in a statement Saturday that central banks in advanced countries, which have played a key role in containing financial market turbulence by injecting money, should focus on achieving price stability while keeping a close eye on inflation in the light of rising food and oil prices, among other factors.
cnnad_createAd("353931","http://ads.cnn.com/html.ng/site=cnn_money&cnn_money_position=220×200_ctr&cnn_ money_rollup=business_news&cnn_money_section=jobs_ and_economy&cnn_money_subsection=quigo¶ms.styl es=fs","200","220");The IMF committee meeting followed a session of the Group of 7 industrialized countries on Friday that pledged to limit the damage to the global economy caused when credit markets froze Aug. 9, triggered by troubles in the subprime U.S. mortgage market that then spread to many other kinds of debt in the U.S. and other countries.
The G-7 includes the United States, Canada, Britain, France, Germany, Italy and Japan.
With the G-7 and IMF meetings over, attention now turns to a meeting Sunday of the IMF’s sister institution, the World Bank and its policy setting committee, the first under its new president Robert Zoellick.
Zoellick, a former deputy secretary of state, trade representative and investment banker, took over from Paul Wolfowitz, a former defense secretary, who resigned in May in an ethics scandal.
Zoellick has been trying to "calm the waters" that were stirred by differences Wolfowitz had with some of the 185 member governments and the bank staff. A new strategy he has outlined would have the bank combat poverty, especially in Africa, help aid countries emerging from wars, and promote regional cooperation to combat disease and climate change.
Washington police said Saturday’s protests of the World Bank and the IMF annual meetings so far have been mostly peaceful.
That follows at least one violent incident Friday night in the upscale Georgetown neighborhood, 10 blocks east of the meeting site. Many of the delegates to the IMF and bank meetings stay at hotels in Georgetown and eat in its restaurants.
One woman was hit in the head by a thrown brick. It was unclear how badly she was injured.
In an attempt to soothe jittery markets, the IMF statement urged "continued vigilance to maintain well-functioning financial markets."
The ministers said they would continue "to work together to analyze the nature of the disturbances and consider lessons to be learned and actions needed to prevent further crises."
"The turbulence has revealed a number of problems that may be deeper than the specific episode that triggered the tensions," said Italian Economy Minister Tommaso Padoa-Schioppa, the new head of the IMF’s policy-making committee.
The head of the IMF, Spain’s Rodrigo de Rato, was optimistic despite the recent concerns about the credit market.
"The global economy is expanding from a solid foundation," he said.
The IMF statement said global economic growth was moderating amid disturbances in financial markets, but financial growth in countries with fast-growing economies and "strong fundamentals" continue to support the world economy.
Ministers said the financial innovation that led to the packaging of securities based on subprime mortgages in the U.S. "while having contributed to enhanced risk diversification and improved market efficiency have also created some new challenges that need to be properly addressed."
Padoa-Schioppa said that some of the institutions involved in the packaging needed to be monitored.
"There is a clear need for supervisory audits even for the great financial institutions that create these instruments, to understand better what their creations are doing out on the market. This is clearly a reason for concern," he said.
Padoa-Schioppa paid tribute to de Rato, thanking for his leadership over the past 3 1/2 years. He is leaving Oct. 31 and will be replaced by France’s Dominique Strauss-Kahn.
Under an informal arrangement dating to the founding of the IMF and the bank 63 years ago, an American leads the bank and a European heads the fund. Critics say the process is outmoded and should be open to the best qualified candidates.