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The International Monetary Fund (IMF) has warned central banks to be vigilant against a sudden spike in interest rates that could spill over into emerging markets, even as a $1.9 trillion U.S. stimulus package benefits most countries and aids recovery.
IMF spokesman Gerry Rice told a regular news briefing on Thursday that the Fund's preliminary forecasts show the American Rescue Plan Act would boost U.S. GDP output by five per cent to six per cent over three years, but more analysis is needed to reach a final estimate.
Mr. Rice added that exceptionally low dollar funding costs mean there is a risk of a sudden tightening of financial conditions, and this should be carefully managed.
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