JACKSON HOLE, Wyo. — The head of the International Monetary Fund cautioned the world's major central banks Friday not to withdraw their unconventional support for weak economies too soon.
IMF Managing Director Christine Lagarde, speaking at an annual economics conference in Jackson Hole, Wyo., said stimulative policies are still needed in key regions, especially Europe and Japan, which have struggled with prolonged weakness.
Lagarde said central banks must carefully develop strategies for scaling back their efforts to keep borrowing rates low. Any pullback should be determined by the strength of individual economies, she said.
Her comments come as the Fed is signaling that it could slow its bond purchases later this year if the U.S. economy continues to improve. The Fed's bond buying has helped keep U.S. interest rates near record lows.
"Unconventional monetary policy is still needed in all places it is being used, albeit longer for some than for others," Lagarde said.
The anticipation of a slowdown in Fed bond buying has unsettled U.S. stock and bond markets and sent interest rates up, triggering turmoil in some emerging economies, such as Turkey, India and Indonesia. Officials in those countries have tried to halt declines in the value of their currencies as investors have shifted money into higher-yielding investments elsewhere.
Lagarde said finance officials should prepare contingency plans in case market turbulence worsens.
She said the IMF will provide support where possible, including emergency loans to countries that need them.