US slowdown temporary - IMF

The US Federal Reserve does not need to consider an additional monetary policy stimulus as the world's largest economy is likely to pick up in coming quarters due to growth in exports and disposable incomes, IMF acting chief John Lipsky said today.

A slowdown in growth in the United States and other major economies is likely to be temporary, caused by a spike in energy prices, the acting managing director of the International Monetary Fund said.

There is a risk of high unemployment as economic recovery will be slow, and it is appropriate for advanced economies to maintain accommodative monetary policies, Mr Lipsky added.

"Our expectation is current US monetary policy is consistent with a return to moderate growth," he said, when asked if the Federal Reserve needed to embark on additional quantitative easing.

Mr Lipsky would not be drawn into discussing any details of a proposed second euro zone bailout of debt-laden Greece.

Federal Reserve chairman Ben Bernanke yesterday acknowledged that the US economy had slowed but offered no hint of additional stimulus. Mr Bernanke said consumer spending is being held back by an unemployment rate that rose to 9.1 per cent last month, a drop in home values and tight credit.

However, he said growth is likely to pick up as fuel prices moderate and disruptions of parts supplies ease as factories in Japan recover from an earthquake and tsunami.

"Overall, the economic recovery appears to be continuing at a moderate pace, albeit at a rate that is both uneven across sectors and frustratingly slow from the perspective of millions of unemployed and underemployed workers”.

The Federal Reserve has already cut overnight interest rates to near zero and bought more than $2 trillion in government bonds, a policy known as quantitative easing, to pull the economy from a deep recession and spur a recovery.

The Federal Reserve's current $600 billion round of government bond buying, known as QE2, is due to end this month.

Agencies