US Fed comments causing anxiety, says finance deputy Zhu Guangyao

Deputy Finance Minister Zhu Guangyao said yesterday that hawkish signals by the US Federal Reserve had brought uncertainty to the global economy. He warned that an interest rate rise next spring would ripple through emerging economies.

Zhu's remarks follow new Fed chairwoman Janet Yellen's announcement last week that the US central bank would continue to wind down its bond-buying programme, putting it on track to end by the autumn.

Yellen said the end of the so-called quantitative easing (QE) measures - which at their peak saw US$85 billion a month pumped into the economy - could be followed in "six months or that kind of thing" by the Fed's first interest rate rise.

"If an interest rate hike happens six months after the QE exit, the impact on the US economy and the rest of the world would be substantial," Zhu said at the annual China development forum in Beijing.

He said the moves would complicate the global economic environment and Chinese economic officials would be watching the American unemployment rate closely.

The Fed has set an unemployment rate of 6.5 per cent as the threshold for lifting borrowing costs from their historic lows. The rate was 6.7 per cent in February, up from 6.6 per cent in January.