ROME (Reuters) - Accommodative monetary policy will remain necessary for as long as global growth remains weak, IMF managing director Christine Lagarde said in a newspaper article published on Wednesday.
With the global economy in a fragile state, central banks from Europe to China have cut interest rates in 2014, and the possibility of printing money to buy government bonds looms large in some places.
“Accommodative monetary policy will continue to be necessary while growth remains anemic, although we must pay very close attention to the risk of potential spillover,” Lagarde wrote in an opinion piece for Italian business daily Il Sole 24 Ore.
Six years after the 2008 financial crisis, the global economy risks falling into a prolonged period of slow growth and scant job creation, Lagarde said, calling for fresh political impetus to activate measures agreed by G20 countries last month.
Lagarde said progress had been made in regulating financial services but that countries must now pursue reforms and improve banking supervision.
She called for tighter control over “shadow banking”, or non-bank credit and off-balance sheet bank lending, and said more effort was needed to “fill the shortfall” of data on the financial sector and allow for better regulation.
To rebuild public trust, the financial sector needs to change culturally and “behave ethically”, Lagarde said.
A boost to global trade could help unlock investment in 2015, she added, saying she was confident that a worldwide agreement on climate change is possible by the end of the year.
Reporting by Isla Binnie; Editing by Catherine Evans