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IMF Chief Warns Against Ending Economic Stimulus Too Soon


The head of the International Monetary Fund is warning governments there is a real danger to the economy if they prematurely end the extraordinary efforts they have been making to stimulate the economy.

Dominique Strauss-Khan spoke in Germany on Friday, where he also said efforts to reform financial regulation are moving too slowly.

The IMF chief's comments come as the battered economy appears to be recovering from the worst financial crisis in decades.

To stimulate the economy, governments have cut interest rates to historic lows, and taken other steps to increase the amount of money available for businesses and consumers to borrow.

These policies are expensive, and could increase the risk of inflation in the future, so officials want to curtail them as soon as possible.

Strauss-Khan also said there is broad agreement on the need to improve the way the financial system is regulated, but considerable debate on how to do it. He spoke in particular about changing the way financial executives are paid. Critics have said short-sighted policies have given huge bonuses to executives that took huge short-term risks, with sometimes disastrous long-term consequences.

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