Lagarde urged leaders in Washington to fix U.S. public finances. She said cutting budgets too quickly could hurt the growth in the short run. But she also urged policymakers to do a better job of managing the soaring cost of pension and medical programs that are growing as the unusually large “Baby Boom” generation moves into retirement.
Lagarde spoke one day after the U.S. central bank decided to continue its strong efforts to stimulate the economy. Lagarde said the Federal Reserve should cut stimulus efforts gradually when it finally decides the economy is strong enough to do without them.