European Central Bank President Christine Lagarde warned on Friday that “the global economy is currently facing divisions similar to the pressures that led to the emergence of (economic nationalism), the collapse of global trade and the depression of the 1920s.”
“The profound shifts in the global economy could make inflation volatile for years to come, complicating efforts to control prices, but commitment to inflation targeting remains the best option,” Lagarde said, according to a report published by the Financial Times.
“We have faced the worst pandemic since the 1920s, the worst conflict in Europe since the 1940s, and the worst energy shock since the 1970s,” Christine Lagarde said in a speech at the IMF headquarters in Washington.
“These disruptions, coupled with factors such as supply chain issues, may have permanently altered global economic activity,” she explained.
Lagarde’s speech came two days after the Federal Reserve cut interest rates by 50 basis points, sending U.S. stock markets to record highs.
In her speech, Lagarde noted that “there are many similarities between the 1920s and the 2020s,” pointing to “setbacks in global trade integration and significant technological progress in both periods.”
Although monetary policy in the 1920s made matters worse, with adherence to the gold standard pushing leading economies into deflation and banking crises, she said, “We are in a better position today to address these structural changes than our predecessors were.”
Last updated: September 21, 2024 – 15:18
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2024-09-22 11:00:40