In its latest World Economic Outlook report, “Managing Divergent Recoveries”, the IMF says that “multispeed recoveries could pose financial risks if interest rates in the US rise further”. They could cause “inflated asset valuations to unwind in a disorderly manner, financial conditions to tighten sharply, and recovery prospects to deteriorate, especially for some highly leveraged emerging markets and developing economies”.

This is a better articulation of the point I was trying to make in my most recent piece in this publication (“Bank should not wait too long before normalising rates (”, March 30). Policymakers need to worry about where their countries are in the economic recovery relative to the US because, for good or ill, US policy decisions set global monetary conditions. Countries that lag the US in the economic recovery might end up ...

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