DAVOS, Switzerland— Christine Lagarde, the managing director of the International Monetary Fund, has warned of the risks posed to the global economic recovery from the reduction of the U.S. Federal Reserve’s monetary stimulus and falling prices in the eurozone.
There is growing evidence that the global economy is faring better than it has been for years. But Lagarde said Saturday at the World Economic Forum that policymakers around the world have to be alert to the potential repercussions, particularly in emerging markets, of the Fed’s “tapering” its $85-billion-a-month bond purchases. It decided to embark on the policy change in December.
She also voiced concerns that the eurozone may suffer a bout of deflation. Falling prices have blighted Japan’s economy for years.