Lagarde Says U.S. Is at Risk of Losing Global Leader Role
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.”
Source: Dow Jones