Lagarde Says U.S. Is at Risk of Losing Global Leader Role
October 20 2019 - 11:02PM
Dow Jones News
By Kate O'Keeffe
Christine Lagarde, the departing head of the International
Monetary Fund who is set to take over as president of the European
Central Bank, said in an interview that the U.S. risks diminishing
its role as a global leader and warned of dire consequences of its
trade war with China.
"I was brought up as a citizen of this world. The risk I see is
that the United States is at risk of losing leadership. And that
would be just a terrible development," Ms. Lagarde said in a "60
Minutes" program that aired Sunday.
Ms. Lagarde also warned President Trump against pushing the
Federal Reserve for lower interest rates because it could spur
inflation. "When the unemployment rate is at 3.7%, you don't want
to accelerate that too much by lowering interest rates," she said.
"Because the risk you take is that then prices begin to go up. You
have to be very careful. You know, it's like navigating a
plane."
She said she would tell Mr. Trump: "Market stability should not
be the subject of a tweet here or a tweet there. It requires
consideration, thinking, quiet and measured and rational
decisions."
The White House didn't immediately respond to a request for
comment.
Ms. Lagarde, who made the comments in interviews in September,
said the U.S. has been a force for good, fostering the principles
of rule of law, democracy, free markets and respect for the
individual.
She urged policy makers to work to end the trade war between the
U.S. and China, which she said is seriously impacting the global
economy. "If you shave off, you know, almost a percentage point of
growth that means less investment, less jobs, more unemployment,
reduced growth."
Finance ministers and central bankers who gathered in Washington
for the IMF's fall meetings this past week said the biggest risks
to the global economy are trade-related uncertainties. Global
economic growth has shrunk this year to its slowest pace since the
2009 recession, the IMF said.
Ms. Lagarde, in the interview, lamented both the U.S. and the
U.K.'s retreat from international ties, saying that the U.K.'s
attempt to leave the European Union in particular has caused her
"great sadness."
"International trade, connections, movement of people and
movement of capital has taken hundreds of millions out of poverty.
Now, some people in the advanced economies might say, 'Pooh. What
do I care?'" she said.
She added: "What can walls do about pandemics? What can walls do
about terrorism? What can walls do about climate change and
destruction of the environment? This is not the answer to the
global questions and issues that interconnect, whether we like it
or not."
Write to Kate O'Keeffe at kathryn.okeeffe@wsj.com
(END) Dow Jones Newswires
October 20, 2019 22:47 ET (02:47 GMT)
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