PARIS: IMF chief Christine Lagarde (pictured) warned on Saturday that economic stimulus from US tax cuts may lead to a rapid rise in interest rates which would weigh on countries with high debt levels. The International Monetary Fund was going to be “attentive” to the consequences of the reform, which notably includes a sharply lower corporate tax rate, she told French radio station France Inter. Lagarde’s remarks echoed concerns in financial markets which have been in turmoil amid fears that rising US inflation will trigger faster Federal Reserve interest rate rises than had previously been expected.
She said the US tax reform “will operate like a kind of stimulus on the current economic situation” in the US which was already experiencing “strong” growth. “You have to ask yourself whether this will not result in rising wages, rising prices and therefore rising inflation and whether, consequently, there is a risk of a reaction by the monetary authorities, notably in the form of interest rates rising a little faster or a little more frequently,” she said.— AFP
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