Central banks must consider spillover effects: Mexico's Carstens
JACKSON HOLE, Wyo.
JACKSON HOLE, Wyo. Aug 23 (Reuters) - Central banks in rich countries cannot ignore the international effects of their policies, and conducting monetary policy in a vacuum could spark another financial crisis, Mexico Central Bank Governor Agustin Carstens said on Friday.
Speaking at the Kansas City Federal Reserve's annual Jackson Hole conference, Carstens warned about the dangers of a mismanaged exit from unconventional monetary policies in countries like the United States for their developing world counterparts.
Advanced economy central banks need to mind the spillover effects of their actions, he said. Otherwise the lingering crisis will be reactivated but probably with new actors.
Emerging market currencies have come under heavy selling pressure recently following signals from the U.S. Federal Reserve that it may be getting ready to dial back the pace of its bond-buying monetary stimulus.
"It would be desirable for advanced economies to implement a more predictable exit," he said in remarks as a part of a panel discussion. "Better communication, speaking with one voice, is very important."
Mexico's economy shrank for the first time since 2009 in the second quarter. Lower government spending, sluggish consumption and weak demand for exports hammered industry and services, prompting the government to slash its growth outlook.
However, many analysts still believe the central bank will keep interest rates on hold as it watches for the withdrawal of U.S. economic stimulus measures and forecasts a pickup in growth in the second half of 2013.
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