For more than a year, I have advocated, not for a tight U.S. monetary policy, but for one that would begin unwinding those policies put in place during the crisis. In January 2010, as the recovery entered its third quarter, I expressed the view that the Federal Open Market Committee should modify its rate guarantee to the market.
The IMF’s latest forecasts indicate that an upswing is under way. While we broadly share this view, we see, however, still a number of risks. In this context, I wish to mention three problems: First, there are widespread concerns that the large current account deficits and surpluses are not sustainable.