Low Bond Liquidity May Trap Investors When Rates Climb, IMF Says
- Central banks preparing to raise rates must consider liquidity
- IMF makes comments in report to be released in full Oct. 7
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The flood of easy money from the world’s central banks may be masking the risk that bond markets may be starved for liquidity when interest rates increase to normal levels, the International Monetary Fund said.
Liquidity is tightening as banks become less willing to serve as market-makers amid tougher regulations and efforts by the financial industry to reduce risk, the IMF said in a study released on Tuesday.