IMF says Fed has room to ease if outlook worsens

By Greg Robb

WASHINGTON (MarketWatch) - The Federal Reserve has room to ease monetary policy should the outlook deteriorate, the International Monetary Fund's executive board said on Thursday, but a number of directors raised doubts that another substantial bond-purchase plan would work. "A number of [IMF] directors observed that the effectiveness of additional monetary policy easing could be limited in the prevailing very low interest rate environment," the statement said. The Fed ended its two-day meeting on Wednesday without taking any new action to stimulate the economy. The IMF's executive board released the statement after annual talks between the international financial agency and the U.S. government. Many emerging market governments have criticized the Fed's quantitative easing, saying it only served to drive down the dollar's exchange rate. The IMF staff said further easing may again weaken the dollar but would have positive spillover from strengthening the U.S. economy and hedging against downside risks.