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The coming taper tantrum | TheHill

Mount Equity Group Tokyo Japan > News > Markets > The coming taper tantrum | TheHill

In a recent Financial Times interview, Gita Gopinath, the International Monetary Fund’s (IMF) chief economist, warned that the emerging market economies cannot afford a repeat of the 2013 Bernanke “taper tantrum.” That tantrum occurred when the Federal Reserve signaled a sooner-than-expected withdrawal of monetary policy stimulus, which sparked a surge in global borrowing costs.

Judging by his speech at Jackson Hole last week, it seems Federal Reserve Chairman Jerome Powell did not receive Gopinath’s memo. By opting to maintain the easiest of monetary policies at a time of rising inflation, Powell risks letting inflationary expectations take hold. That in turn might require the Fed to slam on the monetary policy brakes sometime next year to keep inflation in check, which could cause global borrowing costs to jump by more than they did in 2013. 

From the perspective of the U.S. and world economic outlook, Gopinath does us a…

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