IMF Warns Of Challenges From Fed's Unwinding Accommodation

(RTTNews) - The International Monetary Fund warned that there are significant challenges from the U.S. Federal Reserve's exit from quantitative easing.

The risks include excessive interest rate volatility that could have adverse global implications, the Washington-based lender said late Friday.

Concluding the annual assessment, the IMF stressed that effective communication on the exit strategy as well as a careful calibration of its timing will be critical for reducing these risks.

The Executive Board of the IMF welcomed the recent improvements in the U.S. housing and labor markets. The board retained 1.7 percent growth for this year and 2.7 percent for 2014.

The lender forecast inflation to pick up somewhat but to remain below the Fed long-run objective of 2 percent, given the lingering slack in the economy.

Further, the agency highlighted the importance of gradual but sustained reduction in the fiscal deficit.