By Andrew Mayeda
The world’s central bankers and finance ministers have plenty on their minds as they gather in Washington this week for the spring meetings of the International Monetary Fund and World Bank. Front and center: the timing and pace of the Federal Reserve’s first interest-rate increase since 2006. IMF Managing Director Christine Lagarde has warned that markets could be in for a “bumpy ride” once the Fed starts raising rates.
The impact of rising U.S. borrowing costs will be potentially seismic. In a speech last week previewing the meetings, Lagarde said market liquidity could evaporate “if everyone rushes for the exit at the same time.” The risks are especially dire for commodity-exporting emerging economies, which could find themselves hammered by falling prices for their goods and a rising dollar, which would increase the burden of their U.S.-denominated debt.
Uncertainty about the Fed’s intentions is already magnifying…
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