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Financial markets, not Europe, are the key risk to global growth, says IMF 

April 15, 2015

Vesna Poljak, Sydney Morning Herald Business Day

The International Monetary Fund has warned that disruption in financial markets remains one of the biggest risks to global growth this year. But the Washington-based organisation did not pin the blame on a potential interest rate hike from the US Federal Reserve, which it predicts for the second-half of 2015.

Risks were judged to be more balanced than in the IMF's October update because the chances of a hard landing in emerging markets has decreased, but the distribution of risks is "still tilted to the downside". Oil is one of the few bright spots in that it may boost demand, yet on the flipside a sharp recovery in energy prices presents a new risk to consider alongside the rallying US dollar.

"Disruptive asset price shifts in financial markets remain a concern," the IMF said in its latest update, published on Tuesday. "Term and other risk premiums in bond markets are still low in historical terms, and the context underlying this asset price configuration – very accommodative monetary policies in the major advanced economies – is expected to start changing in 2015.

Read more: Sydney Morning Herald

 
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