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Fed Can Limit Spillovers by Avoiding Asset Sales, IMF Paper Says

The Federal Reserve may be able to limit damaging spillovers to emerging economies by refraining from asset sales during its exit from unprecedented monetary stimulus, according to an IMF study.

The side effects for developing nations were much larger when the Fed conducted bond purchases to spur growth in the wake of the global financial crisis than when it relied on conventional changes to its benchmark federal funds rate, International Monetary Fund economists said in a paper published last week.