Lagarde warns banks not to end stimulus too soon

International Monetary Fund managing director Christine Lagarde has warned central banks not to end their stimulus packages too soon.

Last week’s revision of Q2 GDP figures up to 0.7 per cent was the latest positive economic news in the UK and debate has begun over when and how the long period of loose monetary policy in the UK and elsewhere can be wound down.

Speaking at Jackson Hole on Friday, Lagarde said: “I do not suggest a rush to exit. Unconventional monetary policy is still needed in all places it is being used, albeit longer for some than for others.”

Earlier this month, Bank of England governor Mark Carney set out his forward guidance on monetary policy, explaining that the monetary policy committee would not consider rising interest rates until unemployment falls below 7 per cent or there is a greater than 50 per cent chance that inflation will be above 2.5 per cent in the next 18 to 24 months.