International Monetary Fund managing director Christine Lagarde said she was worried about the result of looming elections in Europe, though she insisted the eurozone was making progress in resolving its economic problems.
“I am worried, as we all are, about some of these elections,” Lagarde told an international conference of economic policymakers and academics in Dubai, when asked about this year’s votes in France, the Netherlands and Germany.
She did not elaborate.
Marine Le Pen, who has promised to take France out of the eurozone, is attracting support before presidential elections, while far-right politician Geert Wilders is riding high in Dutch opinion polls and Chancellor Angela Merkel’s conservatives face a tough challenge in German elections.
Asked whether governments’ continued wrangling over how to resolve the eurozone debt crisis showed the European Union was failing to deal with big issues, Lagarde defended the EU, saying Ireland, Portugal and Cyprus had all recovered from crises.
But she added, “More to be done. More to be done. No question about that.”
Lagarde also said the IMF was watching very closely plans by the administration of US President Donald Trump to re-evaluate the Dodd Frank financial reform law, which was put in place to reduce risk on Wall Street after the global financial crisis.
“When it comes to financial stability, to the ability to supervise, to the strength of those institutions with due accountability – I think it’s critically important for the mission that the IMF has, which is financial stability around the world.”
Lagarde said there was reason to be optimistic about US economic growth, which could be boosted by tax reforms and infrastructure spending planned by Trump.
But she added: “The more worrying news – if you will – is that it will have consequences on the rest of the world.”
Faster US growth and low unemployment could lead to more US interest rate hikes, while inflation in the US has begun to approach the threshold which would also trigger monetary tightening, she said.