Stark divisions are emerging among economic policymakers about how quickly governments and central banks should withdraw emergency support measures, with Dominique Strauss-Kahn, the managing director of International Monetary Fund, warning yesterday about the risks of early exit.
In a speech in London, Mr Strauss-Kahn said the global economy stood at the cusp of recovery but remained highly vulnerable to shocks and policy mis-steps. Economic stimulus programmes should not be stopped too soon.
Mr Strauss-Kahn stressed the importance of waiting for a sustained recovery in demand, as well as clear indications of financial stability, before accommodative measures were withdrawn. “It is too early for a general exit. We recommend erring on the side of caution, as exiting too early is costlier than exiting too late,” he said.