World to Fed: We're prepared for U.S. rate hike, so don't delay
By Howard Schneider and Jonathan Spicer
JACKSON HOLE, Wyo. Aug 30 (Reuters) - Central bankers from around the world are telling their American counterparts that they are ready for a U.S. interest rate hike and would prefer that the Federal Reserve make the move without further ado.
In private and in public at last week's global central banking conference in Jackson Hole, the message from visiting policymakers was that the Fed has telegraphed an initial monetary tightening and, following a year-long rise in the dollar, financial markets globally are as ready as they can be.
The powerful group gathered at the end of a roller-coaster week in markets in which the Dow tanked by 1,000 points on Monday on concerns of a slowdown in China but recovered to trade higher by the end of the week. Remarks by Fed officials that liftoff could come in September were blamed by some for that volatility.
But for Agustin Carstens, the top central banker in Mexico, a rate hike by his neighbor sends an encouraging sign of economic health, even if it does force growth-challenged Mexico to also raise rates within days.
"If the Fed tightens, it will be due to the fact that they have a perception that inflation is drifting up, but more important that unemployment is falling and the economy is recovering," Carstens told Reuters in an interview.
"For us, that is very good news," he added.
While Yao Yudong, head of the People's Bank of China Research Institute of Finance and Banking, last week blamed the Fed for the market turmoil and said a U.S. hike should be delayed, most central bankers from emerging markets contacted by Reuters at Jackson Hole and over the past month shared Carstens' view.
An end to more than six years of rock bottom U.S. rates will touch off a wave of potentially painful adjustments as countries deal with the likelihood of an even stronger dollar as well as capital outflows from some emerging markets and changes in the relative prices of traded goods. An end to uncertainty for policymakers, however, could outweigh those difficulties. Continuación...