By Reuters Staff
WASHINGTON (Reuters) – The International Monetary Fund on Thursday warned central banks to be vigilant against a sudden spike in interest rates and tighter financial conditions that could spill over into emerging markets, even as a $1.9 trillion U.S. stimulus package will benefit most countries.
IMF spokesman Gerry Rice told a regular news briefing that the Fund’s preliminary forecasts show the American Rescue Plan Act passed on Wednesday would boost U.S. GDP output by 5% to 6% over three years, but more analysis is needed to reach a final estimate. But exceptionally low dollar funding costs mean there is a risk of a sudden tightening of financial conditions, and this “should be carefully managed,” Rice added.
Reporting by David Lawder; Editing by Chizu Nomiyama
Our Standards: The Thomson Reuters Trust Principles.