Balance Sheets Steady On
IMF Chair Lagarde raised a few eyebrows amid what was largely a tame Jackson Hole gathering. Amid the vibrant discussion over policy normalisation and forward guidance, she scalled upon central banks to avoid ‘rushing to the exit’. Before the Eurozone crisis, resolving balance-of-payments crises in emerging markets was more the IMF’s forte. Although structural imbalances were the root cause of problems, history suggests that stimulus reduction or outright tightening by developed market central banks was a direct outflows trigger. Still relevant in 2013, but current trends do not point to any such dash for the doors.
Read the full report: UBS