International Monetary Fund Managing Director Christine Lagarde on Tuesday warned an interactive meeting here that emerging economies faced market volatility from U.S. interest rate hikes.
“I am afraid this may not be a one-off episode. This is so, because the timing of interest rate lift-off and the pace of subsequent rate increases can still surprise markets,” the IMF chief said.
Ms. Lagarde said emerging markets must prepare in advance to deal with this uncertainty. Praising Reserve Bank of India Governor Raghuram Rajan, she said he was the one who steered the Indian economy to safer waters after it was hit by the market turmoil following the ‘taper tantrum’ episode of mid-2013.
“India’s monetary policy rests in good hands. So I am very pleased to say that, in a very short time span, India successfully contained its domestic and external vulnerabilities more than in many other emerging economies,” she said.
She also praised Prime Minister Narendra Modi’s Jan Dhan Yojana and the reform measures initiated in the past months.
“I am fascinated by the vibrancy I see wherever I go in India. The world is looking to India to lead the path to higher, sustainable, and inclusive growth,” she added.
