IMF urges Asian Central Banks to not follow Fed too closely

The International Monetary Fund (IMF) has urged Asian Central Banks to not follow the Fed too closely.

IMF Director of the Asia and Pacific Department Krishna Srinivasan this week recommended Asian Central Banks to focus on domestic inflation and avoid making their positive decisions overly dependent on anticipated moves by the Federal Reserve.

“ If central banks follow the Fed too closely, they could undermine price stability in their own countries,” Srinivasan said, addressing a press briefing on Regional Economic Outlook for Asia and Pacific.

IMF staff analysis shows that U.S. interest rates have a strong and immediate impact on Asian financial conditions and exchange rates. The Fund noted that expectations about Fed easing have fluctuated in recent months, driven by factors that are unrelated to Asian price stability needs.