When the real economy has stalled looser monetary policy has only a limited effect, said Dominique Strauss-Kahn, the managing director of the International Monetary Fund.

"There is a well known asymmetry with regard to monetary policy that needs to be taken into account. When the real economy is growing rapidly, tightening monetary policy through higher interest rates increases the cost of capital, and can reduce the incentive to invest, thereby acting as a brake," Strauss-Kahn said. "However