Wed. Apr 24th, 2019

Lagarde defends the "independence" of the central banks before the Trump-Fed shock

Lagarde defends the "independence" of the central banks before the Trump-Fed shock



The managing director of the International Monetary Fund (IMF), Christine Lagarde, defended on Saturday the importance of the "independence" of the central banks, when being asked by the constant attacks of the president of the USA, Donald Trump, to the president of the Federal Reserve, Jerome Powell.

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"What I can tell you is that on behalf of all the central bank governors with whom I have spoken in the last week, there was a shared concern about three principles," Lagarde said at a closing press conference at the Spring Assembly of the IMF and the World Bank (WB).

The first is "accountability, how they have to inform" the governments of their countries about their actions; the second is "the transparency of the process by which they reach conclusions"; and the third, the challenges in achieving effective "communication" of measures that are often explained with specialized "jargon".

"They need these three components to be credible and to continue fulfilling their mandates, and they have different mandates around the world (...), but independence has benefited their mission over time, and I hope that it continues to do so" said Lagarde.

The managing director of the IMF responded to a question related to the constant criticism of Trump to Powell and the decision of the Federal Reserve (Fed) to raise interest rates in the United States last year.

In March, Trump argued that the US economy would have grown even more in 2018, above 4%, had it not been for those actions of the central bank of his country.

In 2018, the Fed carried out four increases in the price of money, given the fear of overheating the economy due to the aggressive fiscal stimulus launched by the US president through sharp tax cuts for companies and, to a lesser extent, for the workers.

The IMF downgraded its forecasts for the United States this week, which is expected to grow 2.3% this year, two tenths less than expected three months ago; and warned about the effects on the global growth of the trade dispute between Washington and China.

"We recognize the need to resolve trade tensions and support the necessary reform of the World Trade Organization (WTO) to improve its functioning," said the final communiqué of the meeting of the IMF and the World Bank, which brought together leaders in Washington this week. of its 189 member countries.

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