FACTBOX-Global central banks on exit timing

Sept 18 (Reuters) - With the global economy showing signs of emerging from recession, the focus is shifting to how central banks around the world will withdraw the extraordinary monetary stimulus they put in place to fight it.

Below are recent comments from some major central banks on the timing of an exit.

U.S. FEDERAL RESERVE:

The policy-setting Federal Open Market Committee (FOMC), which kept the benchmark interest rate unchanged in a range of zero to 0.25 percent in August, said exceptionally low interest rates would likely be needed for an "extended period". [ID:nN02506231]

Most analysts expect the Fed to raise rates in 2010. [FED/R]

"As the FOMC has said, that time is not likely to come for an extended period," Federal Reserve vice chairman Donald Kohn said on Sept. 10. [ID:nN10365910]

Chicago Fed president Charles Evans, asked on Sept. 9 how long the Fed will stand by its zero interest rate policy, said: "I think the markers for that will be when the recovery takes hold, when unemployment starts coming down, when it's firmly embedded in the outlook, when businesses are truly forward looking." [ID:nNAT007075]

Fed chairman Ben Bernanke said on Sept. 16 that the worst U.S. recession since the Great Depression was "very likely" over, but the recovery would be slow. [ID:nLG703256]

EUROPEAN CENTRAL BANK

The European Central Bank kept euro zone interest rates at a record low 1.0 percent on Sept. 3. Analysts expect it to leave rates there until at least the middle of 2010. [ID:nL3374378]

"Now is not the time to exit. But I would like to make it clear that the ECB has an exit strategy, and we stand ready to put it into action when the appropriate time comes," ECB president Jean-Claude Trichet said on Sept. 4. [ID:nL4382390]

"When we get a feeling that economic growth is on the right track, this will necessarily mean we have to start exit strategies for monetary and budgetary policies," said Governing Council member Guy Quaden on Sept. 15. [ID:nWEA0968]

There has been recent improvement in euro-zone economic data, with Germany and France's economies emerging from recession, but policy-makers have warned that the outlook remains uncertain.

BANK OF JAPAN

The Bank of Japan said it has become slightly more optimistic about economic and financial conditions on Sept. 17, bringing it a step closer to phasing out support for corporate funding. It kept interest rates unchanged at 0.1 percent. [ID:nT354152]

Board Member Miyako Suda said on Sept. 9: "If we keep abnormal steps longer than needed even after corporate finance conditions have improved enough, their side-effect could outweigh any advantages. We should be careful not to let that happen ... At present, the bank has no predetermined idea about its next move."

Japanese exports and output have bounced back from a steep fall triggered by the global crisis, helping the economy return to growth in the second quarter.

BANK OF ENGLAND

The Bank of England left interest rates at a record low of 0.5 percent on September 10 and left its 175 billion pound quantitative easing program intact. Analysts expect the BoE to keep rates low well into 2010.

BoE policymaker Andrew Sentance said on Sept. 17, when asked about the central banks quantitative easing program:

"In a few months time we'll need to assess whether we need to increase that programme even further or whether we've gone far enough."

Britain's economy shrank by 0.8 percent in the three months to June -- a vast improvement on the 2.4 percent decline in the first three months of this year. [ID:nONS004389]

SWISS NATIONAL BANK

The SNB stuck to its full set of drastic measures that include interest rates in a zero to 0.75 percent range, bond purchases to support the economy on Sept. 17. It said some deflation risk persisted and the country may face a bumpy road as it moves out of a deep recession. [ID:nLF466403] Most economists expect no SNB rate rise before the second half of 2010.

"The outlook now shows that the expansionary monetary policy cannot be maintained for the next three years because price stability would be compromised in the long term," the SNB said in its statement.

The Swiss economy shrank 0.3 percent in the second quarter, much less than feared by most economists. Key markets for Swiss exporters such as Germany, France and China have started to recover.

RESERVE BANK OF AUSTRALIA

Minutes of the Reserve Bank of Australia's (RBA) meeting released on Sept. 14 showed its board had balanced the risk of fuelling future inflation against prematurely choking off recovery when it decided to leave cash rates at a record low of 3.0 percent. [ID:nSYD435002]

"Members had agreed that, if the economy continued to evolve as in the latest forecasts, the bank would in due course need to adopt a less expansionary policy stance," the minutes showed.

"Information suggested that economic conditions were indeed evolving broadly in that way. Nonetheless, some uncertainty remained about the outlook both at home and abroad."

Australia's economy grew at 0.6 percent in the second quarter. [ID:nSYU007156]. Australia's economy has outperformed most of the world, thanks in large part to a stable banking system and Chinese demand for its resources. [ID:nSYD536295]

BANK OF CANADA

On Sept. 10, the Bank of Canada held its key overnight rate unchanged at 0.25 percent and repeated its pledge to hold it there until the end of June next year as long as inflation stays in check. [ID:nN10231469] The bank has not engaged in quantitative easing.

Deputy Governor John Murray said on Sept 15 that near-term prospects for growth and inflation look good, but that the Canadian dollar could derail the comeback. [ID:nN15272121] Internationally, he urged for increased coordination and sequencing of exit strategies and warned there was much uncertainty about the timing and sustainability of recovery.

He also said Canada has an advantage in carrying out an exit strategy from stimulating the economy because it has fewer extraordinary measures to unwind than many countries.

Canadian gross domestic product contracted at an annual rate of 3.4 percent in the second quarter, slightly worse than expected but still better than in the previous two quarters. The economy is expected to expand in the third quarter.

PEOPLE'S BANK OF CHINA

China will maintain an "appropriately loose" monetary policy into next year, central bank vice governor Su Ning was quoted as saying by local media on Sept. 17.

"The key responsibility of China's monetary policy in the coming period is to maintain economic growth, and China will keep its appropriately relaxed monetary policy in the second half (of this year) and into next year," it paraphrased Su as saying.

It was the first time a central banker has given such a clear timeframe for how long the "appropriately loose" monetary policy stance will last, although officials as senior as Premier Wen Jiabao have repeatedly said they intend to maintain it along with a proactive fiscal policy.

Figures for August showed industrial output, investment and money supply growth all accelerated, prompting many economists to say the recovery is now solid. Chinese officials have warned that the recovery is not yet stable.