Finance ministers from the world's 20 biggest economies agreed yesterday that keeping interest rates at their current low levels won't be enough to prevent a global economic slowdown.
Following a two-day meeting in Ankara, Turkey, they said a coordinated introduction of other reforms was needed to encourage growth.
"Monetary policies will continue to support economic activity consistent with central banks' mandates, but monetary policy alone cannot lead to balanced growth," a spokesperson for the group said.
We note that in line with the improving economic outlook, monetary policy tightening is more likely in some advanced economies.
What this means for US interest rates is unclear, but there was a strong hint that the US should not completely dismiss a September rise just because of the recent market turmoil in China. They said they were confident growth would pick up, and that interest rates in “some advanced economies” would have to rise as a result.
Cevdet Yilmaz, deputy prime minister of Turkey, said at a news conference:
We heard different opinions on the possible Fed decision. Some think the Fed needs to make a decision sooner rather than later, while others think it should delay.
The Federal Reserve will decide at its meeting later this month whether to raise rates now, later in the year or in 2016. They have not been lifted from their current near-zero levels in almost 10 years.
During the summit, IMF chief Christine Lagarde offered her own view that the US Federal Reserve should not rush its decision to raise interest rates, and that they should move only when it seems certain the decision is unlikely to be reversed later.
"It should really do it for good, if I may say," Lagarde said. "In other words, not give it a try and have to come back."