As the monetary policies of central banks are beginning to diverge, there will be an increase in financial volatility warned the G20 on Friday.
In order to avoid negative spillovers, the G20 have recommended that central bankers and policy setters carefully calibrate and clearly communicate their monetary policies. In their draft communique, they also stated that they would continue to monitor financial market volatility and if necessary take actions.
Meanwhile, the US Federal Reserve Chair Janet Yellen is pushing for a move toward an interest rate hike despite the European Central Bank is keeping the monetary spigots open. Janet Yellen is still to persuade the remaining members of the FED to support her vision of an interest rate hike in mid June.
In the draft, G20 warned about uneven nature of global growth and persisting risks, but welcomed the growth in some emerging nations. The G20 pledged to continue their policies of flexibility to support and encourage growth and reiterated the need for continued easy monetary policies in many advanced nations, including the US. They also confirmed their exchange rate commitments.