Rajan warns of policy breakdown as emerging markets fall - Times of India

The author has posted comments on this articleBloomberg | Feb 1, 2014, 07.17AM IST

The country's central bank governor Raghuram Rajan warned of a breakdown in global policy coordination after the US Federal Reserve further cut stimulus, weakening emerging-market currencies from the rupee to the Turkish lira.

Rajan, a former chief economist at the International Monetary Fund, called for greater cooperation among policy makers weeks before finance chiefs from the world's top developed and emerging markets gather in Sydney. The Fed's January 29 statement made no mention of developing economies.

"International monetary cooperation has broken down," Rajan, 50, said in an interview in Mumbai with a news channel, noting how emerging markets helped pull the global economy out of crisis starting in late 2008. "Industrial countries have to play a part in restoring that, and they can't at this point wash their hands off and say we'll do what we need to and you do the ad justment."

"The US should worry about the effects of its policies on the rest of the world," Rajan told a group of students in Mumbai in response to a question on how Indian policies affect other countries. "We would like to live in a world where countries take into account the effect of their policies on other countries and do what is right."

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