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IMF / MARKET TURBULENCE
STORY: IMF/ MARKET TURBULENCE
TRT: 2:13
SOURCE: IMF
RESTRICTIONS: NONE
DATELINE: 6 FEBRUARY 2014, WASHINGTON, DC / FILE
FILE – RECENT
1. Wide shot, exterior IMF building
6 FEBRUARY 2014, WASHINGTON, DC
2. SOUNDBITE: (English) Gerry Rice, IMF Spokesperson:
“The recent increase in market turbulence does not necessarily point to weak fundamentals in all countries affected. A number of countries have taken measures to strengthen policies, reduce vulnerabilities, and shore up confidence. Other countries, though, need policy action to improve fundamentals. Tangible signs of such efforts will help reduce current market volatility and vulnerabilities to future shocks.”
FILE – RECENT
3. Wide shot, journalists
6 FEBRUARY 2014, WASHINGTON, DC
4. SOUNDBITE: (English) Gerry Rice, IMF Spokesperson:
“Experience over the last few months with capital flow management measures has shown once again that they need to be implemented cautiously. For example, they can be useful when macroeconomic policy space is limited, when volatile capital flows pose risks to financial system stability. However, they should not substitute for warranted macroeconomic adjustment.”
FILE – RECENT
5. Med shot, journalists
6 FEBRUARY 2014, WASHINGTON, DC
6. SOUNDBITE: (English) Gerry Rice, IMF Spokesperson:
“It is essential to reduce uncertainty by raising the debt limit promptly and in a durable manner. The U.S. economy has a lot of things going in its favor right now: growth is strengthening, job creation has been relatively strong, and there’s a new budget agreement. However, there are still signs of weakness—unemployment is dropping primarily because people are dropping out of the workforce, and the recovery in residential investment has stalled in late 2013. The last thing the U.S. economy needs is another confidence shock such as a debate about whether the U.S. will honor its debt obligations.”
FILE – RECENT
7. Med shot, reporters
8. Wide shot, exterior IMF building
During its regular bi-weekly press briefing, Gerry Rice, the International Monetary Fund (IMF)’s Spokesperson, answered questions on the increase in emerging market volatility, including the need for capital controls, and the Fund’s views on the U.S. debt limit debate.
A new bout of market volatility has affected emerging economies. Many emerging economies, along with other riskier asset classes, have come under renewed market pressure in early 2014, alongside stock price declines in advanced economies.
While it is difficult to pinpoint a single trigger for the sell-off, the turbulence underscores the challenging situation that many emerging economies face as a result of tighter external financing conditions, including softer commodity prices in the context of tapering and initial steps toward normalizing U.S. monetary policy and, to differing degrees, slower growth and high inflation.
Gerry Rice said the recent increase in market turbulence “does not necessarily point to weak fundamentals in all countries affected.”
When asked if more actions are needed by country authorities, he said “a number of countries have taken measures to strengthen policies, reduce vulnerabilities, and shore up confidence. Other countries, though, need policy action to improve fundamentals. Tangible signs of such efforts will help reduce current market volatility and vulnerabilities to future shocks.”
The turbulence also underscores the need for vigilance among central banks over liquidity conditions in international capital markets. Rice called for caution when using capital flow management measures.
He said “experience over the last few months with capital flow management measures has shown once again that they need to be implemented cautiously”; adding “for example, they can be useful when macroeconomic policy space is limited, when volatile capital flows pose risks to financial system stability. However, they should not substitute for warranted macroeconomic adjustment.”
As the fresh battle looms in the U.S. Congress over the debt ceiling issues, Rice urged to cut uncertainty. He said “as we have said many times, it is essential to reduce uncertainty by raising the debt limit promptly and in a durable manner.”
He added “the U.S. economy has a lot of things going in its favor right now: growth is strengthening, job creation has been relatively strong, and there’s a new budget agreement. However, there are still signs of weakness—unemployment is dropping primarily because people are dropping out of the workforce, and the recovery in residential investment has stalled in late 2013.”
Rice stressed “the last thing the U.S. economy needs is another confidence shock such as a debate about whether the U.S. will honor its debt obligations.”
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