FINANCIAL TIMES: The growing threat of deflation threatens to derail the global economic recovery, Christine Lagarde, managing director of the International Monetary Fund, said on Wednesday as she stressed that the world had yet to put the financial crisis behind it.
“With inflation running below many central banks’ targets, we see rising risks of deflation, which could prove disastrous for the recovery,” said Ms Lagarde, in a speech at the National Press Club in Washington. “If inflation is the genie, then deflation is the ogre that must be fought decisively.”
With central bankers afraid even to mention the word “deflation”, Ms Lagarde’s remarks make her the first high-profile policy maker to give warning that extremely low inflation in rich countries could result in the kind of falling prices that have dogged Japan’s economy for two decades… (more)
