Volatile capital flows pose challenges to EMEs: Rakesh Mohan
PTI | 11:07 PM,Jul 28,2010Mumbai, Jul 28 (PTI) Management of volatile capital flows in emerging market economies is posing challenges to policymakers and a calibrated exit from the accommodative money policies is necessary to face this situation, a former Reserve Bank official said."Management of this volatility involves action in monetary policy, fiscal management, capital account management and also financial market regulation," Reserve Bank's former Deputy Governor, Rakesh Mohan said at a lecture here."This will remain a challenge since there is little international discussion on this issue," Mohan said.After the Global financial crisis shook the world, major economies in the world loosened their monetary policies to support growth in their sagging economies.Reserve Bank also slashed its rates since October, 2008 several times to help the economy tide over the crisis but started reversing the policy path late last year with recovery happening in the economy.The central banks need to ensure a calibrated exit from their accommodative policies to avoid a recurrence of the financial crisis, Mohan said."As the global economy starts recovery, a calibrated exit from this unprecedented accommodative monetary policy will have to be ensured to avoid the recurrence of the financial crisis being experienced now," Mohan said.
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