IMF chief Lagarde warns of dangers of global economic slowdown
The head of the International Monetary Fund (IMF), Christine Lagarde, has issued a warning to governments that the global economy is not growing fast enough and is at serious risk of falling back into recession.
Ms Lagarde warned that European banks could require injections of capital to stop the eurozone crisis spreading. She called for co-ordinated action from global economies to repel the dangers and that this could include the mandatory recapitalisation of European banks.
Speaking at a meeting of central bankers in Jackson Hole, Wyoming, US, she said: “Developments this summer have indicated we are in a dangerous new phase. The stakes are clear; we risk seeing the fragile recovery derailed - so we must act now."
Debt worries and a seeming lack of concrete proposals and economic leadership from both the US and the eurozone has meant a jittery few months for global stock markets.
Ms Lagarde said in her speech that some of the main causes of the financial crisis of 2008 have yet to be addressed adequately. Ms Lagarde acknowledged that governments face a tricky economic balancing act over the coming months by reducing debt and cutting spending but at a rate that consumers in each country can cope with.
She said: "Put simply, macroeconomic policies must support growth. Monetary policy also should remain highly accommodative, as the risk of recession outweighs the risk of inflation."
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