World Bank worried about rising interest rates could trigger rapid inflation and slow economic recovery, especially in Europe and the United States (U.S.).
“It’s the same as waiting for the bubble burst and then clean it and after it will be a new lesson is not expected,” said World Bank President Robert Zoellick in an article published in the Financial Times today in Singapore yesterday. He added, tightening interest rates too quickly, especially in countries such as the recovery process in the U.S. and Europe could trigger a decline in other sectors.
Zoellick also takes note of the Central Bank of Australia (RBA) has raised interest rates even though the recovery has just begun. According to him, these policies allow Asian countries to conduct economic relations with Australia will be under pressure and follow it.
RBA announced raising its benchmark interest rate by 25 basis points to 3.5 percent at the beginning of this month with the reason the country was out of the global crisis. “Low interest rate policy is over,” said RBA governor Glenn Stevens at the time. The policy is the second time after the post-crisis interest rates in October and then Australia dikerek from three percent to 3.25 percent. Previously, the RBA cut interest rates from 7.25 percent in September 2008 to three percent in April 2009.
Its benchmark interest rate in April was the lowest since 1960. The Australian Government is also pumping 70 billion stimulus Australian dollars (USD61, 4 billion) to maintain economic activity. “Raising interest rates when the Fed (U.S. Sentrak Bank) to maintain the level close to zero will cause the appreciation of Asian currencies.
This would make their exports more expensive and a decrease in overseas sales that interfere with the recovery of export value, “said Zoellick. He added that there was a chance of competition from China a currency linked to the U.S. dollar decline makes it goods State Panda is cheaper than the rivals in asia. Meanwhile, Fed officials believe the U.S. economic recovery will be long lasting if not see an increase in unemployment and inflation in the near future.
According to these officials, at a meeting earlier this month, the Fed has expressed concern related to plans to maintain low interest rates in a long time. Because the policy is estimated to have a negative effect and allows for speculative activity in financial markets.
Known, the Fed cut interest rates to near 0 per cent in December last year due to financial crisis global.The Fed also has injected more than $ 1 trillion into the economy to combat the worst recession since the 1930s.
