Tuesday, September 23rd18.0°C
23284

IMF chief Lagarde says policymakers need to avoid mistakes that could harm global recovery

WASHINGTON - The head of the International Monetary Fund warned policymakers on Wednesday to avoid mistakes that could derail a fragile global recovery.

IMF Managing Director Christine Lagarde said that Congress should promptly increase the U.S. government's borrowing limit and the Federal Reserve should avoid withdrawing its financial support too rapidly.

Lagarde noted that the world economy is still feeling the impact of the Great Recession and 2008 financial crisis.

"The crisis still lingers. Yet, optimism is in the air," Lagarde said in a speech at the National Press Club. "The deep freeze is behind and the horizon is brighter."

Lagarde said that the IMF will update its World Economic Outlook next week and the revision will show slightly stronger growth than the last forecast the IMF made in October.

"Momentum strengthened in the latter half of 2013 and should strengthen further in 2014, largely due to improvements in the advanced economies," she said.

But Lagarde cautioned that there were still risks. She specifically mentioned the threat of deflation, a period of falling prices that can freeze economic activity. When it happens, consumers and businesses postpone purchases because they are expecting prices to drop further.

She noted that many nations currently had inflation running below the targets set by central banks. A key inflation gauge in the United States shows prices have risen less than 1 per cent in the past year, well below the Fed's 2 per cent target.

"With inflation running below many central banks' targets, we see rising risks of deflation, which could prove disastrous for the recovery," Lagarde said. She called deflation "the ogre that must be fought decisively."

Lagarde said that Europe is turning the corner from recession. But she described that recovery as uneven. Some European nations are still burdened by high debt and credit restraints. She said the European Central Bank could do more to help the recovery by providing targeted lending.

For big emerging economies such as China, Lagarde said financial regulation needed to be strengthened and officials will need to be alert for any threats such as asset bubbles.

"Now that the global economy looks more stable, the big priority for policymakers in 2014 is to fortify the feeble global recovery," she said.

The Obama administration failed this week to win support from congressional negotiators to include an increase in U.S. support for the IMF in a $1.01 trillion spending bill.

Without the U.S. support, the 188-nation lending agency cannot implement a plan adopted in 2010 to double its resources for lending to troubled countries. The plan would also increase the voting power of emerging-market countries, such as China, Brazil and India, while reducing the voting strength of some Western European nations.

Asked about the failure to win congressional approval for the IMF budget increase, Lagarde said she remained hopeful that the administration will eventually succeed in getting the measure passed by Congress. She said that an IMF with greater resources for lending would be better able to help countries in financial crisis and that would be in the best interests of the United States.

The Canadian Press


Read more Business News

22970


Recent Trending




Today's Market
S&P TSX15125.67-3.33
S&P CDNX925.18-2.91
DJIA17055.87-116.81
Nasdaq4508.688-19.001
S&P 5001982.77-11.52
CDN Dollar0.9030-0.0002
Gold1221.90-0.10
Oil91.50-0.91
Lumber329.10-2.90
Natural Gas3.885+0.016

 
Okanagan Companies
Pacific Safety0.135-0.035
Knighthawk0.01-0.005
QHR Technologies Inc1.26-0.01
Cantex0.05+0.01
Anavex Life Sciences0.20-0.0195
Metalex Ventures0.06+0.01
Russel Metals34.95-0.42
Copper Mountain Mining2.42+0.02
Colorado Resources0.165+0.005
ReliaBrand Inc0.0157-0.0049
Sunrise Resources Ltd0.02-0.005
Mission Ready Services0.265-0.005

 



21269

FEATURED Property
157105211 – 1514 Hwy 3A
2 bedrooms 1 baths
$89,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Is this a fair offer from ICBC?

“Is this a fair offer from ICBC?”…. “How much should I settle for?”… “What is my claim worth?” These are just some of the questions I regularly get as...


Disruptive innovation

Last night I was privileged to be able to speak at the Greater Westside Board of Trade business awards dinner. Photo: ContributedI talked about Innovation and Collaboration which are two very interes...


Executors and their duties

There will be a time when you will need to decide who you should appoint as executor of your Will. As well, there may be a time when you will be asked by someone to act as the executor of his or her W...

_








Member of BC Press Council


22496