IMF chief Christine Lagarde defends rate hikes after Donald Trump slams 'crazy' Fed
- Country:
- India
Central bank rate hikes were a "necessary development", International Monetary Fund chief Christine Lagarde said Thursday, a day after Donald Trump sent global markets tumbling by calling Fed increases "crazy".
"It is clearly a necessary development for those economies that are showing much-improved growth, inflation that is picking up... unemployment that is extremely low," Lagarde told a press briefing at the IMF's annual meeting in Bali.
"It's inevitable that central banks make the decisions that they make." Trump's comments Wednesday triggered a sell-off on Wall Street, with Asian markets opening sharply lower on Thursday in response.
"I think the Fed is making a mistake. It's so tight. I think the Fed has gone crazy," the US president said.
But Lagarde added that uncoordinated developed-country rate hikes were contributing to destabilising capital outflows from emerging markets.
The financial outlook, combined with global uncertainty over trade tensions between Washington and trading partners like China, has created "a bit of an unprecedented situation" for the world economy, said Lagarde.
"Clearly as a result of (rate hikes)... we see and we will continue to see capital flow movements," she added.
"The fact that large central banks of advanced economies are not exactly all moving at the same pace is also probably accelerating that phenomenon." (AFP) MRJ
MRJ
(With inputs from agencies.)
ALSO READ
EMERGING MARKETS-Stocks slip on Fed rate caution and geopolitical woes, currencies flat
EMERGING MARKETS-Taiwan stocks lift emerging markets to 14-month high
EMERGING MARKETS-Israeli shekel rallies over 2% after cenbank leaves rates unchanged
EMERGING MARKETS-Currencies touch 2-month low as dollar rallies on Fed rates prospects
EMERGING MARKETS-Stocks, FX slide after U.S. inflation print triggers global selloff