By Louise Egan
WASHINGTON, Oct 10 (Reuters) - Canada's Finance Minister JimFlaherty said on Thursday the U.S. Federal Reserve should exitfrom its massive bond-buying program as quickly as possible,saying he never supported the printing of money in order tostimulate the economy.
"I don't think they should have done it in the first place,"he told reporters, referring to the Fed's $85 billion-a-monthbond buying program.
"Now that they've done it they should get out of it asquickly as they can," he said.
Flaherty had mentioned in previous remarks that he did notsupport quantitative easing by central banks but had neveroffered an opinion on how the United States should act now thatit has undertaken the unconventional policy.
"It's a short-term remedy that has long-term consequencesand for that reason I am not a supporter of quantitativeeasing."
"It's not to say that in a time of crisis as we had severalyears ago that we ought not to act, which we did, but it is tosay that as long-term government policy, these debt creationshave consequences and none of them are good, includinginflation," he said.
Asked what he thought about U.S. President Barack Obama'schoice of Federal Reserve Vice Chair Janet Yellen, considered adove, as the next Fed chairman, Flaherty was more reserved.
"The choice of the chairman of the reserve bank is thepresident's choice and he made his choice."
He also appeared more sanguine about the fiscal impasseplaying out in Washington and suggested the Group of 20 advancedand emerging economies, which meets over dinner on Thursday andagain on Friday, would not single out the United States in itsfinal communique.
"I'm hopeful that by the time we get to our meetings that wedon't have to talk about it," he said just a few hours beforethe meetings were scheduled to start.
"I think the U.S. is going to resolve its own issues, whichis a good thing at least for the interim."
In a positive sign after 10 days of government shutdown,Republicans in the House of Representatives offered a plan onThursday that would postpone a possible U.S. default and theWhite House said it would consider the offer.
The proposal is a significant shift for Republicans, who hadhoped to use the disruption to extract concessions on spendingand healthcare from President Barack Obama.
G20 HAS LOST ITS WAY
Still, Flaherty said the American political standoff was "notfunny" and that it frustrated him to think the drama could bereplayed in a few weeks' time.
Canada's economy and job market have long recovered from the2008-09 recession but the economy is now slowing and hopes forstronger growth are pinned on the U.S. recovery. Canada sendsaround 75 percent of all its exports to the U.S. market.
The other thing irritating Flaherty, a veteran of the G7 andG20 meetings as Canada's finance minister for nearly eightyears, is what he perceives as a weakening of the G20'scommitment to come up with coordinated policies to bolster theglobal economy.
"I worry about the efficacy of the G20 ... I think to someextent we've lost our way," he said.
"We're having a dialogue tomorrow about the future of theG20 and I will certainly speak to my colleagues about that issuebecause I have more experience than most of them."
- Budget, Tax & Economy
- Politics & Government
- Federal Reserve
- President Barack Obama