The executive board welcomed the improvements in the U.S. economy,which bodes well for
a gradual acceleration of growth. While the balance of risks tilt the outlook to the downside.
They concurred "that the fiscal deficit reduction in 2013 is excessively rapid, and that the automatic spending cuts not only reduce growth in the short term but could also lower medium-term potential growth. They stressed the importance of adopting a comprehensive and back-loaded medium-term plan entailing lower growth in entitlement spending and higher revenues".
A slower plan of U.S. deficit reduction in the short run,would help global growth,place the fiscal
situation on a sustainable path,and would help to reduce global imbalances . They also expressed concern over the possible political gridlock for the next fiscal budget, and expected improvement.
They agreed that "accommodative monetary policy continues to provide essential support to the recovery, but cautioned that its financial stability implications should be carefully assessed. They considered that a long period of exceptionally low interest rates could potentially entail unintended consequences for domestic financial stability and has complicated the macro-policy environment in some emerging markets. In this context, macro-prudential oversight and supervision of the financial system remain essential".
There are significant challenges involved in reducing easy money policy. Including market overreactions in interest rates and currencies.
"They stressed that effective communication on the exit strategy and a careful calibration of its timing will be critical for reducing these risks".
"Directors welcomed the recent improvements in the housing and labor markets. They agreed that the rebound of the housing market has benefited from monetary policy actions and government-backed programs that facilitated refinancing and modification of loans under stress. They saw room for policies that continue to support the housing market while gradually reducing the dominant role of the government-sponsored enterprises".
"Emerging vulnerabilities and risks from persistently low rates in the financial sector need to be carefully monitored. Directors welcomed the strengthening of the regulatory architecture relative to the pre-crisis period, including through the adoption of Basel III capital rules. They emphasized that completing the implementation of the financial reform agenda remains essential to increase the resilience of the U.S. financial system".
Source:IMF Executive Board Concludes 2013, Article IV Consultation
with the United States
a gradual acceleration of growth. While the balance of risks tilt the outlook to the downside.
They concurred "that the fiscal deficit reduction in 2013 is excessively rapid, and that the automatic spending cuts not only reduce growth in the short term but could also lower medium-term potential growth. They stressed the importance of adopting a comprehensive and back-loaded medium-term plan entailing lower growth in entitlement spending and higher revenues".
A slower plan of U.S. deficit reduction in the short run,would help global growth,place the fiscal
situation on a sustainable path,and would help to reduce global imbalances . They also expressed concern over the possible political gridlock for the next fiscal budget, and expected improvement.
They agreed that "accommodative monetary policy continues to provide essential support to the recovery, but cautioned that its financial stability implications should be carefully assessed. They considered that a long period of exceptionally low interest rates could potentially entail unintended consequences for domestic financial stability and has complicated the macro-policy environment in some emerging markets. In this context, macro-prudential oversight and supervision of the financial system remain essential".
There are significant challenges involved in reducing easy money policy. Including market overreactions in interest rates and currencies.
"They stressed that effective communication on the exit strategy and a careful calibration of its timing will be critical for reducing these risks".
"Directors welcomed the recent improvements in the housing and labor markets. They agreed that the rebound of the housing market has benefited from monetary policy actions and government-backed programs that facilitated refinancing and modification of loans under stress. They saw room for policies that continue to support the housing market while gradually reducing the dominant role of the government-sponsored enterprises".
"Emerging vulnerabilities and risks from persistently low rates in the financial sector need to be carefully monitored. Directors welcomed the strengthening of the regulatory architecture relative to the pre-crisis period, including through the adoption of Basel III capital rules. They emphasized that completing the implementation of the financial reform agenda remains essential to increase the resilience of the U.S. financial system".
Source:IMF Executive Board Concludes 2013, Article IV Consultation
with the United States
