International Monetary Fund head Christine Lagarde is concerned many countries are headed for deflation, the Financial Times reports.
“With inflation running below many central banks’ targets, we see rising risks of deflation, which could prove disastrous for the recovery,” she says. ““If inflation is the genie, then deflation is the ogre that must be fought decisively.”
FT notes that Lagarde is the first economic leader to warn that a low interest rate in developed countries could turn into falling prices.
She also advises central banks to continue promoting the conditions for growth and avoid tightening monetary policy too soon.
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