Sept 10, 2015 (LBO) – Central bankers in emerging markets want the US Federal Reserve to increase interest rates sooner rather than later to end market uncertainty.
Central bankers in Indonesia, Peru and Mexico have commented that a rate hike at the September 16-17 or October Fed meetings would be good for their economies.
“We think US monetary policymakers have got confused about what to do. The uncertainty has created the turmoil,” Mirza Adityaswara, senior deputy governor at Indonesia’s central bank, told the Financial Times.
“The situation will recover the sooner the Fed makes a decision and then gives expectation to the market that they increase one or two times and then stop.”
Raghuram Rajan, governor of India’s central bank, told the Wall Street Journal: “It’s preferable to have a move early on and an advertised, slow move up rather than the Fed be forced to tighten more significantly down the line.”
The World Bank’s chief economist Kaushik Basu, however, said that the Fed should keep rates on hold next week to avoid “panic and turmoil” in emerging markets, a message that contrasts sharply with what the central bankers are saying.