World economy strong enough for interest rates to rise sooner than later: top banker

SINGAPORE - The world economy has never been in a better position than it is now since the emergence of the financial crisis, a top banker said during a forum held here on Friday.

Dr Jacob Frenkel, the chairman of JP Morgan Chase International, said the global financial situation has stabilised and the world economy is ready for interest rates to begin going up, or "normalising".

He was speaking at the 2nd Asian Monetary Policy Forum, held on Thursday and Friday at the Pan Pacific Hotel.

The exact timing of the interest rate hike is less important than the fact that expectations of higher rates will remove a fundamental source of uncertainty and distortion in the global economy, Dr Frenkel said.

Too much of the public debate has focused on the cost of normalising interest rates, and too little on the cost of staying for too long on zero or negative rates, he added.

"We should normalise sooner rather than later if the patient is strong enough."

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