Lagarde: 'Low-flation' is emerging risk to economy - MarketWatch

Lagarde: 'Low-flation' is emerging risk to economy - MarketWatch

"Low-flation," particularly in the euro area, is an emerging risk to advanced economies, International Monetary Fund Managing Director Christine Lagarde said Wednesday. "A potentially prolonged period of low inflation can suppress demand and output-and suppress growth and jobs," she said at the School of Advanced International Studies as she called for more monetary easing by the European Central Bank and continued action by the Bank of Japan. It may be the first time Lagarde has used such a phrase, though she has made clear her concern over the lack of euro-zone inflation for some time. Lagarde also saw emerging-market economies and geopolitical tensions as short-term risks, and unemployment, high levels of debt and financial uncertainty as medium-term concerns. Lagarde said overall growth remains too slow and weak, and the IMF projects "modest improvements" in 2014 and 2015.