MercoPress. South Atlantic News Agency

IMF chief calls on economic leaders to act with “conviction and urgency”

Monetary policy should remain “highly accommodative” says Christine Lagarde

Policymakers in advanced economies should use all available tools to boost growth, International Monetary Fund Managing Director Christine Lagarde said on Friday, calling for bold action to weather a “dangerous new phase” of recovery.

Speaking in London, Lagarde also welcomed the 447 billion dollars plan presented by US President Barack Obama to boost a sluggish economy and create jobs.

Lagarde said countries facing market pressures must press ahead with urgent fiscal consolidation, while there was scope for slower action in other countries not at the mercy of market forces.

Economic policymakers had to act with “conviction and urgency” in supporting a faltering global economy, she said, giving her blessing to further quantitative easing.

“Policymakers should stand ready, as needed, to take more action to support the recovery, including through unconventional measures,” Lagarde said.

“For the advanced economies, there is no question that fiscal sustainability must be restored through credible consolidation plans,” she said.

“But we also know that consolidating too quickly will hurt the recovery and worsen job prospects. So the challenge is to find the pace of adjustment that is neither too fast, nor too slow.

”Monetary policy also has a role to play in the advanced economies. Broadly speaking, it should remain highly accommodative, as the risk of recession outweighs the risk of inflation,“ she said.

Lagarde also said Euro zone countries must implement measures agreed on financing in July and warned that some of Europe's banks would need more capital.

”The road ahead may be rocky, but a way forward exists-if we act now. With each country playing their part, we can identify the actions needed to achieve strong, sustainable and balanced growth”.