G-20 to seek clear communication to cushion Fed spillover effect

Global finance chiefs will urge careful and clear monetary-policy changes, deflecting concern that US reaction to a recovery will hurt emerging economies, according to a draft statement obtained by Bloomberg News.

The Group of 20 nations will pledge to "remain mindful" of unintended negative side effects from extended periods of monetary easing, according to a draft of the communique to be completed in Moscow on Saturday. Future changes will be "carefully calibrated and clearly communicated," according to the draft, which also emphasises the harmful effects of "excess volatility" in financial markets.

Speculation about developed economies scaling back their unprecedented monetary easing has roiled emerging-market currencies and bonds since G-20 finance chiefs last met in April. That prompted policy makers including Federal Reserve Chairman Ben S Bernanke to refine their message.

"The crucial challenge is how the financial markets manage these signals and how they manage them in a way in which emerging markets and their currencies are not negatively affected," South African Finance Minister Pravin Gordhan said in an interview with Bloomberg Television on Friday.

Bernanke, who didn't travel to Moscow, has now "done enough" to convey that US policy won't change overnight, giving the rest of the world time to adjust, Gordhan said. The dollar weakened against most of its major peers in response to that reassurance.