“We need a strategy that is good for stability and good for growth – where stability is conducive to growth and growth facilitates stability,” said Christine Lagarde.
Policymakers should aim for a combination of “very accommodating” monetary policy, use of common resources to provide direct support to banks and growth-friendly policies where fiscally possible.
Lagarde said fiscal stability meant governments in advanced economies should outline credible medium-term plans to lower public debt. Without such a plan, countries might be forced to make bigger adjustments sooner, she cautioned.
Developing economies were holding up relatively well, she said, but could “face a cold chill” if global conditions worsened.