DHAKA: The US central bank’s tapering of its economic stimulus programme will pose one of the biggest challenges to increased global financial stability, according to an International Monetary Fund report released on Wednesday.

The Federal Reserve is expected to begin the transition early next year, scaling back its US$85-billion-a-month in bond purchases that have injected cash into the sluggish economy to boost growth.

The easing will be a vote of confidence that the economy is strong enough to stand without extraordinary stimulus.

The IMF’s Global Financial Stability Report said this US strength should help shore up global financial stability.

Yet managing a smooth transition out of the extraordinary bond purchases ‘could prove challenging’ as both interest rates and market volatility rise.

The report was released ahead of the IMF’s annual meeting this week in Washington.

‘This process will be unprecedented and complex,’ said Jose Vinals, the IMF’s financial counsellor, reports The Straits Times.

BDST: 2001 HRS, OCT 09, 2013
RoR/GCP