Thursday, July 28, 2011

IMF chief warns on US default’s far-reaching impact

The new International Monetary Fund chief Christine Lagarde has said that Washington must speedily resolve a political stalemate over raising the debt ceiling and the euro zone should “quickly” implement its sovereign debt crisis fighting plan to avoid more “turbulence”.

Speaking in New York she warned of serious consequences for the world economy if US politicians fail to reach an agreement on raising the debt ceiling by next Tuesday’s deadline: “The critical objective is now for the United States to be able to increase the debt ceiling with a view to avoiding a default, which would be terrible for the United States, which would be terrible for the economy at large.

Lagarde said she hoped “the political courage shown by European leaders will soon be followed by bold fiscal action in the US”.

As she spoke the dollar continued to fall against a range of currencies. (more)