IMF's Christine Lagarde says downside risks to global growth increased

Jessica Morris
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She cited the commodity price rout and China (Source: Getty)

International Monetary Fund (IMF) boss Christine Lagarde today warned that the downside risks to the global economy have increased.

"The downside risks are greater than they were," Lagarde said at a Brookings Institution event on global economic growth. She cited the commodity price rout, monetary policy realignment, as well as China.

Fresh concerns over the health of the Chinese economy have weighed on commodity prices recently, as it's the world's biggest consumer of raw material. This sent copper and coal prices to six-year lows last month.

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It comes as the US Federal Reserve is gearing up to raise the fed funds target rate for the first time since June 2006, bringing an end to its near-zero interest rate policy.

The Federal Open Market Committee (FOMC) held fire on interest rates this month, amid fresh concerns over the Chinese economy and global financial markets. But around 60 per cent of economists polled by Reuters expect the Fed to raise interest rates in December.

A hike will be tricky for China and the emerging market economies, which have a lot of dollar denominated debt, as any move upwards would increase the cost of servicing them.

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