Saturday, August 27, 2011

Lagarde Takes Note of Danger of Second Recession

I am pleased to note that Christine Lagarde seems to be placing greater emphasis on the risk of a double-dip recession and is stressing the idea that, while debt reduction is a proper long-term goal, the immediate need is for rapid action to support growth as well as for accomodative monetary policy given currently low inflation risks:

"La politique macroéconomique doit soutenir la croissance", a souligné l'ancienne ministre française des Finances dans son premier grand discours depuis sa prise de fonction à la tête du FMI en juillet.
"La politique monétaire doit aussi rester extrêmement souple parce que le risque d'une récession est plus élevé que celui de l'inflation."
This is a clearer statement of priorities than I, at least, read in her recent FT article and a different picture from the one painted in the Forbes profile of the new IMF head.

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