IMF Warns of ‘New Phase’ in Crisis – By Tom Barkley and Bob Davis, The Wall Street Journal
“Higher debt levels have the potential for spillovers across financial systems, and to impact financial stability,” the IMF said, noting that debt levels among advanced countries have already risen to levels not seen since the end of World War II…. “Careful management of sovereign risks is essential: governments need to design credible medium-term fiscal consolidation plans in order to curb rising debt burdens and avoid taking the credit crisis into a new phase,” the IMF said in its report. Greece’s struggles should serve as a “wake-up” call to governments, Mr. Viñals said…. The IMF report said money is flooding into Asia and other emerging markets amid low interest rates in the U.S. and Europe. Some markets are showing evidence of overheating, it said. These include residential real estate in Australia, China, Hong Kong and France, and sovereign debt in Japan.
Canada Bank Shift Signals Strong Recovery – Phred Dvorak, The Wall Street Journal
Canada’s central bank said it now sees the economy growing 3.7% this year, more strongly than expected a few months ago. The need for ultralow interest rates to stimulate growth is “now passing,” it said in its Tuesday policy statement. “It is appropriate to begin to lessen the degree of monetary stimulus,” it said…. Economists say Canada’s announcement likely means it will be the first among the Group of Seven leading nations to raise rates, and sharpens the contrast with the U.S., where economy watchers have been divided over the strength of recovery.
