May 11, 2013

G-7 to discuss nurturing global recovery

The yen's dramatic slide and Japan's aggressive monetary policy are likely to be addressed as well.

By PAN PYLAS and MARTIN BENEDYK The Associated Press

(Continued from page 1)

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Dealers in Tokyo work under a monitor displaying a figure of the Nikkei 225 Stock Average, top, and the exchange rate of the yen against the U.S. dollar.

Bloomberg News

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Mark Carney, governor of the Bank of Canada, is flanked by U.S. Treasury Secretary Jacob Lew, left, and Canadian Finance Minister Jim Flaherty at the start of the G7 finance ministers and central bank governors meeting.

The Associated Press

Osborne suggested that this "activism" may involve "targeted interventions" to support lending in weak parts of the economy.

Central banks have played an increasingly active role in trying to help the global economy recover from what is widely considered to be its biggest shock since World War II.

Interest rates have been slashed -- to near zero percent in some cases -- and new money-creation policies have been introduced, notably from the U.S. Federal Reserve and the Bank of England.

This month the ECB cut its key interest rates to a record low of 0.5 percent in a bid to spur lending and help lift the euro area out of a stubborn recession. It also started consultations on how to boost lending to small and medium-sized enterprises -- the key engines of economic growth and employment.

Lew said the G-7 discussions should center on how to boost growth and generate jobs, and added that the U.S. economy was healing but not at a fast enough pace. "We're moving in the right direction but while growth is encouraging it's not sufficient," he said.

Lew singled out Europe as a laggard and said there was a need for policymakers there to get the right balance between austerity and growth.

Jens Weidmann, the head of Germany's Bundesbank, said the key issue was not whether Europe takes its foot off the austerity pedal but that it does what it said it will do.

"It's not about more or less (austerity), I guess we have decided the path and it's important to deliver on these promises," Weidmann said.

Hinting that Germany should do more, Lew said that some nations have "more fiscal space" than others to boost demand.

 

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