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China sees a greater need for coordinated economic policies among G20 countries to deal with the expected increase in financial volatilities as the Federal Reserve pivots toward tightening, former Vice Minister of Finance Zhu Guangyao said on Sunday.

There are signals that the Fed will take immanent measures to end its QE, and the shrinking dollar will create a liquidity crisis that will become a key challenge, Zhu said at a forum held by Ifeng.com.

The U.S. may also face inflation higher than 5% in the coming months and monetary officials seem to be willing to accept that, Zhu said. While 2% inflation was regarded as a healthy benchmark in the past two decades, western economies have adjusted to allow for higher inflation for some time, said Zhu.