Federal Reserve officials rebuffed international calls to take the threat of fallout in emerging markets into account when tapering the US monetary stimulus.
The risk that the Fed's trimming of bond buying will hurt economies from India to Turkey by sparking an exodus of cash and higher borrowing costs was a dominant theme at the annual meeting of central bankers and economists in Jackson Hole, Wyoming, that ended August 24. An index of emerging-market stocks last week fell 2.7 per cent, the steepest in two months, compared with a 0.5 per cent gain in the Standard & Poor's 500 Index.
Such selloffs aren't an issue for Fed officials who said their sole focus is the US economy as they consider when to start reining in $85 billion of monthly asset purchases that have swelled the central bank's balance sheet to $3.65 trillion. Even as the Fed officials advised emerging markets to protect themselves, they were pressed by the International Monetary Fund and Mexican central banker Agustin Carstens to spell out their intentions better in the interest of safeguarding global growth.
"You have to remember that we are a legal creature of Congress and that we only have a mandate to concern ourselves with the interest of the US," Dennis Lockhart, president of the Atlanta Fed, said.
