Christine Lagarde, managing director of the International Monetary Fund, is calling for more action from the U.S. and Europe today to fix the global economy, she said in an exclusive broadcast interview with Marketplace.
Lagarde's comments echoed a speech she gave at the Peterson Institute for International Economics in advance of IMF meetings in Japan next month. Lagarde praised central banks in the U.S. and Europe for the steps they've taken so far to help the worldwide economic recovery. But, she warned, that's not enough.
"[It's] urgent because we have at the moment what we call a momentum. In other words, good things have been done -- particularly by the central banks," she said. "They've created a little bit of calm and responded to the anxiety of the markets. So now is the time for the policy makers to do what they have to do."
Lagarde warned that American politicians need to act responsibly because overly aggressive spending cuts alongside ballooning debt could send the U.S. into another recession. She raised concerns over whether the global economy could handle another few months of U.S. inaction as it inches closer towards the fiscal cliff.
"If it had to, it would suffer," says Lagarde. "The bottom line: it means less growth, less jobs, and the economy of the United States is the largest economy in the world. It has links to the rest of the planet. So it would be bad for the U.S., but it would be bad for the global economy, as well."
And in Europe, she urged a "strong and effective banking union" to keep the euro together.
Listen to the full interview above or click on the transcript tab to read the full text transcript.