IMF Chief Warns About US Fiscal Cliff

September 21, 2012 Share Print 0

The U.S. fiscal cliff poses a near-term threat to the global economy, which also needs to get beyond the eurozone crisis, IMF Managing Director Christine Lagarde said in an interview published Friday.

“In the short term, there is the issue of the fiscal cliff, which is a combination of fiscal cuts that will stop early in 2013 and public spending that will be withdrawn in 2013, if nothing happens,” Lagarde said in an interview with the in-house IMF Survey online publication.

The U.S. fiscal cuts “will be automatic, and it will create a major contraction of the deficit, yes, but also of growth, which would be a threat to the global economy,” she said in comments previewing a speech scheduled for Sept. 24 which itself is designed to be a preview of the goals of the IMF annual meeting in Tokyo Oct. 9-14.

But beyond the short-term threat, Lagarde cautioned that “In the longer term, there has to be again anchoring of expectations about the fiscal policy of the United States in order to address the issue of the deficit and the debt as well.”

via Deutsche Boerse.

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.