The course of US monetary policy is "appropriate" and the country's rate of economic growth should slow to a more sustainable rate in the second half of the year, International Monetary Fund Managing Director Rodrigo Rato said on Friday.
World economic growth was on a sustainable path but central banks had to be "extremely vigilant" to guard against inflationary pressures, Rato said, speaking at a meeting with African finance officials in Madrid.
He envisaged a strong recovery in Japan and stronger growth in the euro area, as well as robust growth in eastern Europe and oil producing countries, adding that the world economy should grow 5 percent this year and post a similar rate in 2007.
"We see that in the second part of the year the US economy will come down from a very strong five percent in the first quarter to a more sustainable pace in the third and fourth," Rato said.
"We see a clear, strong recovery in Japan. We see a stronger growth in the euro area. We see a strong growth in eastern Europe and certainly in oil producing countries," he added.
"The world is in an expansion that is sustainable. The changes in monetary policy in our opinion will bring monetary stimulus to a more sustainable pace, although, as I say, monetary authorities have to be extremely vigilant on inflationary expectations."
The Federal Reserve is expected to raise US rates for the 17th successive time when it meets next week. Rato said some world financial markets were learning how to measure risk in a more sustainable way. "A new appraisal of risk seems to be emerging in some financial markets towards a more natural, sustainable path."
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