MAPUTO – Central banks’ provision of short-term liquidity to markets was appropriate and while the credit crisis may have some impact, world economic prospects are good, International Monetary Fund Managing Director Rodrigo Rato said yesterday.
“I think that the response of central banks to provide liquidity, short-term liquidity to the markets is an appropriate one to overcome the lack of liquidity among participants,” Rato told reporters in the Mozambican capital Maputo. “As we understand, there will be some impact on growth but we still believe that prospects for the world economy are good,” he said.The IMF had recently revised its global economic growth forecast upwards, he added.Global markets have been battered in the past month by fears of financial instability after trouble with risky US sub-prime mortgages and a credit squeeze.Central banks poured billions of dollars into the financial system to help ease fears and add liquidity while the US Federal Reserve on Friday cut 50 basis points off the primary discount rate at which banks borrow from the Fed.Rato said the IMF is monitoring financial markets very closely.Nampa-Reuters”As we understand, there will be some impact on growth but we still believe that prospects for the world economy are good,” he said.The IMF had recently revised its global economic growth forecast upwards, he added.Global markets have been battered in the past month by fears of financial instability after trouble with risky US sub-prime mortgages and a credit squeeze.Central banks poured billions of dollars into the financial system to help ease fears and add liquidity while the US Federal Reserve on Friday cut 50 basis points off the primary discount rate at which banks borrow from the Fed.Rato said the IMF is monitoring financial markets very closely.Nampa-Reuters
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