Dominique Strauss-Kahn, the managing director of the International Monetary Fund (IMF), today warned against any premature exit from supportive monetary and fiscal measures taken by central banks.
Speaking in Berlin, he backed points made by Jean-Claude Trichet, the president of the European Central Bank, in an article in the Financial Timesyesterday, which stressed that the extraordinary measures taken by the European Central Bank were designed with an exit strategy in mind.
Strauss-Kahn said in his speech: “The time is right for policymakers to develop their exit strategies—because failure to clarify and formulate these plans will risk undermining confidence and the recovery process itself.”
Both Trichet and Strauss-Kahn suggested that the continued fragility of the global economy means the time is not yet right to start implementing these policies.
Strauss-Kahn went as far as to say that prematurely abandoning supportive policies was now a “principle concern” for the global community, and urged policymakers to “err on the side of caution”.
Touching on the issue of regulatory reform that has dominated recent headlines, Strauss-Kahn expressed his concern that while there appears to be a broad-based consensus on the need to improve regulation, the pace of reform has been too slow.
He said decisive action was key in order to prevent a “business as usual” mentality from becoming an obstacle to progress.