🗞 Lagarde: IMF chief criticizes Trump's tax reform

With low taxes for companies, US President Trump wants to boost the US economy. Christine Lagarde, head of the International Monetary Fund, is also skeptical.

The head of the International Monetary Fund (IMF), Christine Lagarde, has expressed her skepticism about the tax reform of US President Donald Trump. Although this will boost the American economy in the short term, Lagarde told the French TV channel France 2. In the medium term, however, negative effects are to be expected.

So the project will drive up the national debt in big time. In addition, the US Federal Reserve (Fed) is likely to raise interest rates, said Lagarde. Australian central bank chief Philip Lowe called the prospect of rising US budget deficits "very problematic."

Trump's tax cuts had also met with criticism from many economists. In a Reuters survey of economists, the overwhelming majority described the project as a wrong move. German Finance Minister Peter Altmaier called on Europeans to find an appropriate response to the US tax reform.

With the biggest US tax reform in 30 years passed at the end of 2017, Trump's stated goal was to drive growth to three percent over the next few years.
This expectation, which many experts regard as too optimistic, is also based on the latest draft budget. Critics warn, however, that ultimately the US government debt will be unnecessarily inflated by the tax reform.

Economists are predicting that the US Federal Reserve will rush against economic overheating this year with three rate hikes. This in turn causes anxiety on the stock markets - and contributes to drops in prices.

Source: Reuters

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