Argentina Sees World Interest Rates Falling More

Fiscal stimulus is much more direct.

The world's central banks will likely lower interest rates further in the coming months to help give the global economy a much-needed boost, Argentina's central bank president said on Sunday.

But Martin Redrado also said fiscal policy tends to have a bigger impact on economic growth than monetary policy, adding he welcomed China's massive stimulus package on Sunday as an important step in fighting the risk of a global recession.

"Fiscal stimulus is much more direct," he told reporters when asked about potential policy responses to the global financial crisis.

Redrado was speaking in Brazil's business capital Sao Paulo, where finance officials and central bankers from the G20 group of advanced and emerging economies met to hammer out proposals on how to combat the crisis.

With economies in developed countries like the United States reeling, Redrado said: "The priority (has to be) A, rescue the financial system, and B, stimulate growth in order to get out of the recession."

Redrado said that the prospect of zero-percent interest rates in the United States is "very feasible," adding that he expects economic growth in the United States and Europe of between 1.3 percent and 1.5 percent next year.

"We will have to see what's the result of the Chinese package, the U.S. package," he said, adding that he expected the stimulus packages to have a noticeable effect by the fourth quarter of 2009.