IMF chief optimistic about Trump’s economic team

BERLIN (AFP) — IMF chief Christine Lagarde said Wednesday that she had been reassured by her first meetings with members of the new administration of U.S. President Donald Trump, whose economic program has caused global jitters.

Lagarde singled out “some very positive discussions” with U.S. Treasury Secretary Steven Mnuchin.

“I have had several meetings with officials of his administration in the economic and financial domains and the meetings I had are quite reassuring and comforting,” the International Monetary Fund head told German television ARD during a visit to Berlin.

She said Mnuchin “clearly has indicated his desire to work with the IMF, on a multilateral basis. He’s expecting a candid assessment of the situation and clearly he has an interest in financial stability going forward.”

On Tuesday, Mnuchin called on the IMF to provide “candid analysis” of exchange-rate policies in member countries.

The IMF monitors currencies and other economic policies in the 189 member countries, and its rules dictate that members must avoid manipulating exchange rates... to gain an unfair competitive advantage. However, in practice the fund can only exert real pressure to change policies on those countries that have IMF loan programs in place.

Trump, who has repeatedly accused countries like China, an IMF member, of using trade and currency policies to cheat its trading partners. Lagarde’s comments came a month into Trump’s presidency, after he had campaigned on the slogan “America First.”

In recent weeks, he has sent senior representatives to Europe to convince allies that his putting America first does not mean they will be left behind.

But he has also brandished the threat of hiking customs duties for Mexican-made products entering the United States.

Earlier this month, Trump also took the first step to undoing key reforms enacted after the 2008 financial crisis, aiming to scale back toughened regulations on the banking industry.

He has also accused countries including China, Germany and Japan of manipulating their currencies to boost trade.

Last month the International Monetary Fund raised its estimates for U.S. growth on expected stimulus spending by the Trump administration, but kept the forecast for global growth unchanged.

The IMF warned then that executing protectionist policies could backfire on the U.S. economy and create ripple effects abroad.