IMF chief says contagion risk ‘very high’
ReutersMonday, March 17, 2008
The global economic outlook is worsening and the risk of contagion from a financial markets crisis that began in the United States is now very high, IMF chief Dominique Strauss-Kahn said on Monday.
At a news conference in Paris, he welcomed the overnight steps taken by the US central bank and said the International Monetary Fund would be cutting its growth forecasts again soon.
He also said the European Central Bank and the US Federal Reserve were managing the market liquidity troubles very well, and that the situation in currency markets, while tricky, did not in his view call for central bank intervention.
”Obviously the financial markets crisis which started in the United States is now more serious and even more global than it was a few weeks ago. The risks of contagion are very high,” he said.
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Regarding the US central bank’s latest decisions on interest rates and lending facilities and involvement in the JPMorgan takeover of Bear Stearns, he said:
”I think I can just welcome the decisive and prompt measures taken by the U.S. Fed...What has been done by the Fed comes in due time, and the rest of which could be done by central banks will certainly be in line.”
”The central banks, the Fed, the ECB, others, have in my opinion very well managed the question of the lack of liquidity. So there’s no reason to believe that they won’t be able to deal with the liquidity question in the coming weeks.”
The Fed cut the discount rate to 3.25 percent on Sunday. The yuan and yen looked weak, the euro overvalued, and the dollar somewhere in-between, said Strauss-Kahn, holding a news conference he held jointly with OECD chief Angel Gurria.
”The dollar is indeed starting to weaken, it’s true, but the weakest currency is not the dollar,” he said.
ReutersMonday, March 17, 2008
The global economic outlook is worsening and the risk of contagion from a financial markets crisis that began in the United States is now very high, IMF chief Dominique Strauss-Kahn said on Monday.
At a news conference in Paris, he welcomed the overnight steps taken by the US central bank and said the International Monetary Fund would be cutting its growth forecasts again soon.
He also said the European Central Bank and the US Federal Reserve were managing the market liquidity troubles very well, and that the situation in currency markets, while tricky, did not in his view call for central bank intervention.
”Obviously the financial markets crisis which started in the United States is now more serious and even more global than it was a few weeks ago. The risks of contagion are very high,” he said.
(Article continues below)
Regarding the US central bank’s latest decisions on interest rates and lending facilities and involvement in the JPMorgan takeover of Bear Stearns, he said:
”I think I can just welcome the decisive and prompt measures taken by the U.S. Fed...What has been done by the Fed comes in due time, and the rest of which could be done by central banks will certainly be in line.”
”The central banks, the Fed, the ECB, others, have in my opinion very well managed the question of the lack of liquidity. So there’s no reason to believe that they won’t be able to deal with the liquidity question in the coming weeks.”
The Fed cut the discount rate to 3.25 percent on Sunday. The yuan and yen looked weak, the euro overvalued, and the dollar somewhere in-between, said Strauss-Kahn, holding a news conference he held jointly with OECD chief Angel Gurria.
”The dollar is indeed starting to weaken, it’s true, but the weakest currency is not the dollar,” he said.
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