In interviews, foreign leaders and International Monetary Fund officials said they think the Fed, which has linked any “tapering” of its monthly asset purchases to U.S. economic recovery, may give more weight now to the potential impact on world economic conditions. With the Fed chairmanship changing and a U.S. budget impasse adding to uncertainty about the direction of the country’s economy, the foreign pressure could push back further the start of a process many analysts had expected to begin in September.
“The spillovers that come about from large-country policies were uniformly acknowledged,” said Singapore’s finance minister, Tharman Shanmugaratnam, the head of the IMF’s governing body. He said he left the recent meetings with the sense that any U.S. policy shift was “not imminent” and that the world’s major economic powers would “sort out our problems not just by doing the right things for our own economies but also in cooperation.”
U.S. officials did not respond publicly to the concerns raised by other nations and the IMF about the impact of any upcoming shift in the Fed’s program of quantitative easing, which currently involves the monthly purchase of $85 billion in different securities.
As the U.S. economy strengthens, the Fed is expected to steadily reduce that amount, though it has not said when the change will occur or how fast it will proceed. At some point, the central bank may also start selling the assets it has accumulated in recent years, another point of uncertainty. Eventually, the time will come to raise benchmark interest rates, though that is considered far off.
Other nations, particularly those awash in dollars that flowed overseas as a result of Fed policies, have a stake in the outcome, and Fed Chairman Ben S. Bernanke said last month the central bank is studying the possible impact “very carefully.”
But he and other Fed officials have emphasized that the primary aim is a strong U.S. economy — something that would also benefit the rest of the world.
“My colleagues in many of the emerging markets appreciate that — notwithstanding some of the effects that they may have felt — that efforts to strengthen the U.S. economy . . . ultimately redounds to the benefit of the global economy,” Bernanke said last month.
Few would disagree, and recent studies by the IMF and others have said the United States is retaking its traditional role as a mainstay of global growth.