G20 vows to be 'mindful' of bank moves on economies

Finance ministers from G20 nations on Sunday vowed to clearly communicate and be "mindful" of the impact of central bank decisions on the global economy after rifts over the US stimulus wind-back. The fallout being felt by some emerging economies, as a by-product of the US Federal Reserve's easing back of its mammoth stimulus programme, has been a lightning-rod issue in Sydney. However, IMF chief Christine Lagarde said the "hostility" she had been expecting between developed and emerging economies did not happen. "Interestingly enough and thanks to the good cooperation that was induced by this meeting we did not have that," she said. "We had a very solid consistent exchange of views, respect for each other's necessary policies, understanding of the spillover effects that one will have over others," she said. Countries led by Indonesia, South Africa and Brazil had urged the US ahead of the meeting to provide more clarity on its plans and better communication to subdue the impacts on their markets, which have suffered capital flows and currency volatility. In response, the US had said emerging markets should take steps of their own to get their fiscal houses in order. "We all stand ready to take the necessary steps to maintain price stability, by addressing in a timely manner deflationary and inflationary pressures," the world's top economies said in a final communique. "All our central banks maintain their commitment that monetary policy setting will continue to be carefully calibrated and clearly communicated in the context of ongoing exchange of information and being mindful of impacts on the global economy." European Central Bank President Mario Draghi also played down any rifts. "We had a quite full discussion, not I would say not controversial at all, but certainly full and searching for a better understanding," he said. Australian Treasurer Joe Hockey, who agrees that countries must make their own reforms to bolster their economies to blunt the impact of quantitive easing, said there had been "honest" discussions in Sydney about the impact of tapering. "I must say Doctor (Janet) Yellen was incredibly impressive in dealing with the issue," he said of the new US Fed chief. "The fact is that there was proper recognition that the movement of monetary policy in major developed countries either way, whether it be tightening or easing, has an impact. "There was proper recognition that that would be taken into account in the foreseeable future," he added. India's Finance Minister P. Chidambaram expressed satisfaction with the final communique, but said Delhi had been among those expressing  concern about the impact of US monetary easing on developing countries. "When countries withdraw from quantitative easing they should keep in mind the spillovers on the developing countries," he told the Press Trust of India news agency. "When they (developed world) sought our cooperation during the economic downturn, it is only fair that they cooperate with developing countries during the economic recovery."