IMF (International Monetary Fund) managing director Christine Lagarde said it was essential to reduce uncertainty surrounding the US fiscal policy. “It will be essential to reduce uncertainty surrounding the conduct of fiscal policy by raising the debt limit in a more durable manner,” she said after the necessary legislation was signed by Obama shortly after midnight on Thursday thanks to a Republican split in the House of Representatives, forming broad bipartisan support in the Senate to pull the US back from the brink of a debt default and gain the fun to government until 15 January, raising the debt ceiling until 7 February.
However, it is considered as a temporary fix. As regard to the stability issue, she also proposed that US approve a budget for 2014 and adopt phased-in measures gradually in a bid to not harm the recovery in medium-term fiscal year.
Dramatic shift as it is, Asia and Europe stock markets overall surprisingly displayed a muted reaction with traders expecting another battle in Washington early in 2014. President of the World Bank Jim Yong Kim commented on the case that policymakers in all countries should “continue to focus on crafting and implementing policies that promote economic growth and boost jobs and opportunity for all”.
Barak Obama, the president of United States, also manifested his wish that he did not expect another bitter budget fight and shutdown next year and called on that “We’ve got to get out of the habit of governing by crisis”.