IMF urges effective Fed communication on exit strategy

WASHINGTON, July 26 Fri Jul 26, 2013 10:31am EDT

WASHINGTON, July 26 (Reuters) - The Federal Reserve will need to effectively communicate its strategy to exit from its massive monetary stimulus to avoid excessive interest rate volatility, the International Monetary Fund said on Friday.

In its annual assessment of the U.S. economy, the IMF said while the Fed had a range of tools to manage the normalization of monetary policy, there were risks and challenges in the unwinding of the stimulus the central bank has lent the economy.

"Effective communication on the exit strategy and a careful calibration of its timing will be critical for reducing these risks," the IMF said.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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