IMF’s Lagarde Says U.S. Job Numbers ‘Not at Potential’
International Monetary Fund Managing Director Christine Lagarde said job creation in the U.S. is “not at potential,” as regulatory and policy uncertainties deter some companies from hiring.
In an interview with Fox News airing today, Lagarde also urged the European Central Bank to address the euro region’s risk of low inflation and said Ukraine’s government must adopt some of the measures it has pledged to take before receiving IMF money to aid its struggling economy.
U.S. payrolls rose 192,000 in March, the Labor Department reported April 3, compared with the median forecast of 200,000 in a Bloomberg survey of 90 economists.
The numbers “could be and they should be higher,” Lagarde said in the interview transcript Fox released yesterday. “What is holding us back is probably a degree of uncertainty, a lack of confidence, the fact that a lot of companies are investing into themselves more than actually investing into capacity and in job creation.”
The rise of geopolitical tensions including in Ukraine, along with risks of prolonged ultra-low inflation in advanced economies and of volatility in emerging markets, may cloud the world’s economic outlook, Lagarde said last week in a speech in Washington.
In the interview on Fox’s “Sunday Morning Futures with Maria Bartiromo,” Lagarde said policy makers have a responsibility to create the conditions to spur investment and boost growth. To get there, she said she wants finance ministers and central bankers from the IMF’s 188 member countries to confront these challenges when they meet in Washington this week.
Asked about recent comments by ECB President Mario Draghi retorting the IMF’s advice to the central bank, Lagarde said the fund’s recommendation for more monetary easing, including with the use of unconventional measures, has been consistent for a few months.
Draghi last week quipped that the IMF has been “extremely generous in its suggestions” to him on monetary policy, in a way that it isn’t with the U.S. Federal Reserve. Lagarde said she also makes recommendations to the Fed.
“We do say what we have to say when we think that it’s appropriate to say it,” she said. “We are not driven by other institutions’ agenda. We had for a long time taken the view that the ECB should be addressing the issue of inflation, targeting within the right range, the right level.”
After a preliminary agreement reached last month, the IMF executive board has yet to approve a loan for Ukraine of between $14 billion and $18 billion, Lagarde also said.
“And on the side of the Ukrainian authorities, we need a certain number of actions that have to be taken,” she said. Ukrainians need a “coalition of the willing” to “take their country and their destiny and their economy into their hands and move forward.”
Lagarde didn’t elaborate on the specific actions she would like to see.
Ukraine is seeking to revive its cash-strapped economy while still under military threat from Russia, whose takeover of the Black Sea Crimean peninsula has reignited Cold War tensions with the U.S. and Europe.
Ukraine reached a preliminary bailout agreement with the Washington-based IMF last month for the loan package that could provide as much as $18 billion in loans over two years. The rescue would unlock additional international financing, bringing the total package to $27 billion.
Moody’s Investors Service, citing the political crisis afflicting Ukraine, cut the country’s credit rating on April 4. Moody’s lowered the rating one level to Caa3, two steps above default, with a negative outlook.
To contact the editors responsible for this story: Chris Wellisz at email@example.com Don Frederick, Nancy Moran