G8 to ask IMF for study on cutting stimulus: source

By Gavin Jones and Gernot Heller

LECCE, Italy (Reuters) - The world's rich nations will ask the International Monetary Fund to study ways of unwinding the drastic steps taken to rescue the global economy, a source with knowledge of the plan said on Friday.

The source, who declined to be named, said finance ministers of the Group of Eight nations would request the study in a communique to be released on Saturday, after two days of talks in the southern Italian town of Lecce.

The move would not mean countries will quickly roll back the drastic easing of budget and monetary policies that they have put in place during the global economic crisis.

But it does suggest they feel an economic recovery is in sight, and that they want to reassure financial markets they can manage the recovery without unleashing a wave of inflation.

A leap in long-term government bond yields over the past several weeks shows markets fear the huge sums of public money pumped into economies will eventually fuel inflation and damage governments' finances for years to come.

Pressure has therefore been building in the G8 for talks on ways to wind down stimulus programs as soon as they are no longer needed -- "exit strategies" that would prevent market interest rates from rising high enough to threaten economic recovery.

"The IMF report will be probably presented at the (IMF's) October annual meeting in Istanbul," the source told Reuters.

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