IMF official says market optimism based on "benign" policy view

WASHINGTON (Reuters) - The International Monetary Fund's top official for financial system stability said current market optimism is based on a "benign" view of policy plans going forward, particularly in the United States, and things might not go as expected.

IMF Financial Counselor Tobias Adrian told a news conference that downside risks highlighted in a new IMF financial stability report show the need for getting the policy mix right.

"The downside risks arise from deviations from the expected path of future policy," said Adrian, a former research director at the Federal Reserve Bank of New York. "We highlight particularly two such risks, from fiscal expansion that would lead to a higher and faster rise in interest rates, and a shift to inward-looking policies that could lead to a decline in global growth."

He also said while the U.S. corporate sector is generally healthy, debt levels are at historically high levels and there is a "tail of weaker firms" holding about $4 trillion in debt that

"If policies go unexpectedly badly, some part of the corporate sector might be exposed to these unexpected shocks, Adrian said.

(Reporting by David Lawder; Editing by Chizu Nomiyama)