IMF’s Strauss-Kahn Seeks Recovery First, Then Inflation Fight
Former U.S. Federal Reserve Chairman Alan Greenspan expressed concern over inflation, while Dominique Strauss-Kahn, the International Monetary Fund’s managing director, speaking to the Yalta European Conference in southern Ukraine, suggested first securing an economic recovery.
“Going out of the crisis will have consequences, we need to discuss an exit strategy,” said Strauss-Kahn during the video link. “But we need to secure the recovery before we address the problem” of inflation.
Governments worldwide responded to the financial crisis and the worst recession since the Great Depression by pumping cash into their economies. The results varied. U.S. unemployment is at a 26-year high of 9.7 percent.
“In the next two to three years, we are going to have serious problems,” Greenspan said in a video link from Washington with the conference.
The former Fed chief, 83, who pressed former President Bill Clinton to trim fiscal plans to bring down borrowing rates more than a decade ago, warned that inflation will be a “great cost for the U.S. and its trading partners.”
Greenspan said that inflation is going to be a “political problem” and will need “political capability” to combat it. “And I would say the same about other central banks in the world,” he added no fax cash advance.
Federal Reserve Governor Kevin Warsh said yesterday that the U.S. central bank may need to raise interest rates with “greater force” than it has in the past to keep inflation in check.
Recovery Underway
Greenspan last month estimated an economic recovery began with a 2.5 percent growth rate in the U.S. in the third quarter.
Economists surveyed by Bloomberg News this month put the odds of a double-dip recession in the next 12 months at 25 percent, up from 20 percent in August. The economy will expand at a 2.9 percent annual rate in July through September, according to the median of 61 estimates in the survey taken Sept. 3 to Sept. 10.
Consumer prices in the U.S. fell 1.5 percent in August from a year earlier, the Labor Department reported on Sept. 16. Prices fell 2.1 percent in July, the most since Harry S. Truman was president in 1950.
The U.S. jobless rate reached 9.7 percent last month and employers have cut almost 7 million jobs, the biggest drop in any recession since World War II.
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