QE3 not necessary: IMF’s Lipsky

Stanley White and Tetsushi Kajimoto
Financial Post

TOKYO — The Federal Reserve does not need to consider additional monetary policy stimulus as the world’s largest economy is likely to pick up in coming quarters due to growth in exports and disposable incomes, IMF acting chief John Lipsky said on Wednesday.

A slowdown in growth in the United States and other major economies is likely to be temporary, caused by a spike in energy prices, the acting managing director of the International Monetary Fund told Reuters in an interview.

There is a risk of high unemployment as economic recovery will be slow, and it is appropriate for advanced economies to maintain accommodative monetary policies, Lipsky said.

“Our expectation is current U.S. monetary policy is consistent with a return to moderate growth,” he said, when asked if the Fed needed to embark on additional quantitative easing.

Lipsky would not be drawn into discussing any details of a proposed second euro zone bailout of debt-laden Greece.

Federal Reserve Chairman Ben Bernanke on Tuesday acknowledged the U.S. economy had slowed but offered no hint of additional stimulus. If the current lull in the economy is more prolonged, that could put the Fed in a bind as it has exhausted many of its policy options.

The article continues at the Financial Post.

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