4 Min Read
WASHINGTON (Reuters) - Canada's Finance Minister Jim Flaherty said on Thursday the U.S. Federal Reserve should exit from its massive bond-buying program as quickly as possible, saying he never supported the printing of money in order to stimulate the economy.
"I don't think they should have done it in the first place," he told reporters, referring to the Fed's $85 billion-a-month bond buying program.
"Now that they've done it they should get out of it as quickly as they can," he said.
Flaherty had mentioned in previous remarks that he did not support quantitative easing by central banks but had never offered an opinion on how the United States should act now that it has undertaken the unconventional policy.
"It's a short-term remedy that has long-term consequences and for that reason I am not a supporter of quantitative easing."
"It's not to say that in a time of crisis as we had several years ago that we ought not to act, which we did, but it is to say that as long-term government policy, these debt creations have consequences and none of them are good, including inflation," he said.
Asked what he thought about U.S. President Barack Obama's choice of Federal Reserve Vice Chair Janet Yellen, considered a dove, as the next Fed chairman, Flaherty was more reserved.
"The choice of the chairman of the reserve bank is the president's choice and he made his choice."
He also appeared more sanguine about the fiscal impasse playing out in Washington and suggested the Group of 20 advanced and emerging economies, which meets over dinner on Thursday and again on Friday, would not single out the United States in its final communique.
"I'm hopeful that by the time we get to our meetings that we don't have to talk about it," he said just a few hours before the meetings were scheduled to start.
"I think the U.S. is going to resolve its own issues, which is a good thing at least for the interim."
In a positive sign after 10 days of government shutdown, Republicans in the House of Representatives offered a plan on Thursday that would postpone a possible U.S. default and the White House said it would consider the offer.
The proposal is a significant shift for Republicans, who had hoped to use the disruption to extract concessions on spending and healthcare from President Barack Obama.
Still, Flaherty said the American political standoff was "not funny" and that it frustrated him to think the drama could be replayed in a few weeks' time.
Canada's economy and job market have long recovered from the 2008-09 recession but the economy is now slowing and hopes for stronger growth are pinned on the U.S. recovery. Canada sends around 75 percent of all its exports to the U.S. market.
The other thing irritating Flaherty, a veteran of the G7 and G20 meetings as Canada's finance minister for nearly eight years, is what he perceives as a weakening of the G20's commitment to come up with coordinated policies to bolster the global economy.
"I worry about the efficacy of the G20 ... I think to some extent we've lost our way," he said.
"We're having a dialogue tomorrow about the future of the G20 and I will certainly speak to my colleagues about that issue because I have more experience than most of them."
Reporting by Louise Egan; Editing by Andrea Ricci