IMF’s Lagarde Laments “Highly Mysterious” Low Inflation, Says “Everybody” Would Like It To Be Higher
Without skipping a beat, IMF Director Christine Lagarde left President Xi’s Belt and Road initiative conference and traveled to sunny southern California to make an appearance at the Milken Institute Conference, where she sat for an interview with former WSJ editor-in-chief (now editor-at-large) Gerry Baker.
Given that Friday’s surprisingly robust (at least on the surface) GDP print has revived speculation among some economists about ‘divergence’ between the US and the global economy, Baker led with a question about whether Q1 GDP had impacted the view on US growth over at the IMF.
While the surprisingly large number will “certainly lead us to reassess our forecast for growth in the US,” which could in turn boost the global economy, Lagarde cautioned that one strong GDP print doesn’t make a trend, and that the global economy remains mired in what she called a “delicate moment.”
Earlier this month, the IMF again slashed its forecasts for global growth, this time to its weakest level in a decade.
Asked if we’re seeing more divergence now.
“We still think that it’s a delicate moment given the still synchronized slowdown for growth…you have about 70% of the global economy which is slowing – but still growing – and we are not expecting a recession and certainly not in our baseline. Everybody including the highest authorities were certainly surprised by the large number in the United States…that will certainly lead us to reassess our forecast for growth for the United States, and clearly given the size of the US economy it will have an impact overall.”
Looking ahead, the upcoming reading on US productivity will be important.
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