IMF chief La­garde de­fends bank rate hikes

Pres­i­dent Trump slams ‘crazy’ US Fed­eral Re­serve amid mar­ket tur­moil

Global Times US Edition - - WORLD -

International Mone­tary Fund (IMF) chief Chris­tine La­garde on Thurs­day de­fended cen­tral bank rate hikes in a veiled re­buke to Don­ald Trump af­ter the US pres­i­dent blamed “crazy” Fed poli­cies for con­tribut­ing to fi­nan­cial mar­ket tur­moil.

La­garde spoke as a global mar­ket sell­off rolled into Asia fol­low­ing Trump’s com­ments, un­der­scor­ing the ris­ing fi­nan­cial volatil­ity that the IMF will ad­dress at its an­nual meet­ings with the World Bank this week in Bali.

La­garde, 62, said cen­tral bank rate in­creases such as those by the pol­icy-set­ting US Fed­eral Re­serve were jus­ti­fied by fun­da­men­tals.

“It is clearly a nec­es­sary de­vel­op­ment for those economies that are show­ing much im­proved growth, in­fla­tion that is pick­ing up... un­em­ploy­ment that is ex­tremely low,” she told a press brief­ing in Bali.

“It’s in­evitable that cen­tral banks make the de­ci­sions that they make.”

Fol­low­ing a sharp Wall Street sell-off on Wed­nes­day, Trump said the Fed­eral Re­serve “is mak­ing a mis­take.”

“I think the Fed has gone crazy,” he said.

Trump has re­peat­edly touted Wall Street record highs as proof of the suc- cess of his poli­cies and con­fronta­tional trade strat­egy, and fre­quently crit­i­cizes the Fed for grad­u­ally rais­ing in­ter­est rates, which could squeeze the brakes on eq­uity mar­kets.

The world’s fi­nan­cial elite are on the In­done­sian hol­i­day is­land for a week of talks clouded by the eco­nomic out­look.

An IMF re­port re­leased Wed­nes­day said global growth could be at risk if emerg­ing mar­kets de­te­ri­o­rate fur­ther or trade ten­sions es­ca­late.

Much of the global angst has been dom­i­nated by Trump’s es­ca­lat­ing tar­iff war with China and his dis­dain for world trad­ing norms.

But higher US in­ter­est rates have also helped send emerg­ing mar­ket cur­ren­cies into a tail­spin, as coun­tries that bor­rowed heav­ily in dol­lars race to pay back debt.

La­garde said in Bali that world lead­ers should fix global trad­ing sys­tems in­stead of tear­ing them down, in re­sponse to ris­ing na­tion­al­ist im­pulses.

While de­fend­ing rate hikes, La­garde added Thurs­day that un­co­or­di­nated in­creases in ad­vanced economies were con­tribut­ing to desta­bi­liz­ing cap­i­tal out­flows from emerg­ing mar­kets.

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