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Critical Issues
Background:
A slew of signs that the world has passed the worst of its economic slowdown has stirred interest in when and how central banks will roll back monetary easing. Less negatively affected economies with higher inflation are likely to tighten first, as Israel demonstrated with a rate hike in August and Australia demonstrated in October 2009. Countries most severely hit by the financial crisis must be careful not to tighten prematurely, before unemployment stops rising, but must also manage inflation expectations from driving up interest rates. They may consider alternative monetary policy regimes that would prevent financial crises. Central banks must coordinate their tightening strategies as timing is of utmost importance to prevent a disorderly exit from loose monetary policy.
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Associated Readings
Analysis
IMF
Nov 08, 2009
IMF Note on Global Economic Prospects and Principles for Policy Exit
Analysis
Economist Intelligence Unit
Nov 06, 2009
World economy: Disorderly exit
Analysis
IMF
Vladimir Klyuev, Krishna Srinivasan and Phil de Imus
Nov 08, 2009
Unconventional Choices for Unconventional Times: Credit and Quantitative Easing in Advanced Economies
Analysis
Credit Agricole
Sep 15, 2009
Exit strategies: a practical guide
Analysis
Natixis
Patrick Artus
Aug 21, 2009
Exit strategies for central banks: A problem of economic policy, not a technical problem
Analysis
TD Waterhouse
Don Drummond, Beata Caranci, Richard Kelly and James Marple
Aug 28, 2009
The Great Recession: Lessons and Opportunities
Analysis
BBVA
Jose Luis Escrivá
Jul 03, 2009
Zero interest, quantitative easing: Appropriate for now, but where is the exit?