ADB Says Too Early to End Stimulus; No China Bubble

The head of the Asian Development Bank warned it was too early for Asian countries to end stimulus policies started during the financial crisis and said he saw no big risk of price bubbles in China. Haruhiko Kuroda said on Thursday that policymakers still needed to restore demand and stabilise financial systems to support the economic recovery.

China’s surprise move on Tuesday to raise bank reserve requirements was “quite appropriate” even if there were no big asset price risk in the world’s third-biggest economy.

“While we believe developing Asia is leading the global economic recovery, it is still too early to relax vigorous efforts to restore demand and stabilise financial systems,” Kuroda told a forum on the crisis. He said the rebound in the world economy was fragile.

Asia is leading the recovery but growth is unlikely to lead to runaway inflation, Kuroda said.

“The timing of exit from policy stimulus needs to be tailored to countries’ individual situations, taking into account inflation risks where output gaps are turning positive, as well as debt levels,” Kuroda later told reporters.

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