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Fischer Says Global Economy Can Better Cope with Fed Hikes

Federal Reserve Vice Chairman Stanley said the global economy is slowly gaining momentum and can better handle the implications of further monetary tightening by the U.S. central bank.

In prepared remarks released to the media, the Fed official said that he expects the policymakers' gradual removal of accommodation will be due to a sustained pace of economic growth. He said that economies abroad will likely gain advantage from developments that will prompt the central bank to hike rates.

He added that the majority of central bank overseas are capable of reacting to U.S. rate increases with policy actions that reduce the effect on the financial market environment in their respective economies.

The U.S. central bank is anticipated to continue its cycle of tightening monetary policy this 2017 while other central banks are expected to leave rates unchanged or ease policy. The divergence in their actions is widely anticipated to cause the dollar to appreciate, making it harder for non-U.S. firms that issue dollar-denominated debt.

He expressed optimism on the prospect of global growth, partially due to the high demand in U.S. He also noted the declining unemployment and the strengthening inflation in the Euro area, as well as indications that China's economy seems to be on a stronger footing.

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