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Thanks and the International Monetary Fund has advice for -- the US economy calling on the US to immediately end the sec west ration cuts raise the debt ceiling.
And throwing the IMF support the president Obama's budget plan IMF also revising its outlook for the US growth and 2014.
Down to two point 7% from 3% our lives claimant is live in Washington with -- next.
Exclusive interview with the IMF managing director Christine Lagarde -- -- -- Thank you Dennis we are here at the International Monetary Fund headquarters in Washington DC with the latest IMF report specifically -- On the United States its recovery its growth -- any kind of upside or downside risks that the IMF sees.
In a Fox Business exclusive we are here with but I'm Christine Lagarde who is of course the managing director of the IMF.
Thank you so much for joining us my pleasure well in this report I see a bunch of optimistic revelations but also some very pointed observations.
About everything involving.
The Fed the sequestration.
Our growth so let's start first.
With the US recovery specifically you say in the report that the nature of it is changing -- and what do you mean by that.
We believe that there is recovery and about -- -- is much more stable and durable than we had seen before.
We full 'cause the US economy up one point nine and 2013.
And that we believe that because of the housing market significant improvement in particular.
They will be a more durable recovery.
Could be better.
And clearly the unemployment numbers on adults.
Where they should be they should be -- -- -- And receive the the fiscal.
Policy the deficit cup team as being too how much on the economy of the.
Moment let me get to that unemployment great right now about seven point 6% right just -- up from April to may -- it should be lower right now.
What great would you have expected it to be acting realistic for this moment in time.
-- what I'm saying is not to.
You know when when the US economy is.
Working at full potential if you will.
-- it -- -- which is why.
We are saying that while the recovery is under way it has to continue it has to be consistent in order to effectively.
Have a dent on unemployment which brings me to growth in 2014.
And while you can say we'll see two point 7% better than 2013.
You've got credit that the earlier I have -- expectation was 3%.
Correct why the -- -- a couple of tenths of a percentage point.
When we full cost -- 3% we have assumed that sequestration.
Will gradually be removed and to re -- not to do more intelligently.
All right and we haven't seen that yet and we haven't seen bugs and we fear but they're not going to see it in the near term.
Which is why we believe that sequestration will actually in -- Growth in the United States in 2014.
Which is why we downgraded slightly from 3%.
To two point 7% which is a lot more than this year.
The words that -- used and folks I want you to understand that that that the wording is important here in this IMF report you specifically say.
The sequester it was quote excessively rapid.
And ill designed to it exerts a heavy toll on growth in the short term but then he went on to say that it should be replaced.
With the back loaded mix of entitlement savings and new revenues.
We have at least in the United States in a way it felt like we dodged a bullet that the sequester wasn't as bad as everybody thought.
And yet you're worried about -- there -- some other -- you -- Downward on this and other shoe to drop with -- in the second half of this year.
I think a lot of people -- both sequestration was ill designed and I think it -- put in place precisely to be avoided.
So what -- is saying now is slow down.
But how -- What do I mean slow -- business needs to -- -- The deficit by two and a half the stunt it's it's very heavy.
On the growth hatred in -- by about one point 5% may be a little bit more particularly if if if it picks up.
And his second.
Second quarter of 2013.
We'll also saying hurry out.
Because there are long term measures that will be critical for the US economy.
That needs to be taken no deeply concerning entitled.
-- let me get to housing because -- say the one thing you worry about because you just heard I don't look -- was very very upbeat about US housing saying it's recovering but you say.
Be aware of weakening loan standards down this brings me to the Federal Reserve.
The Fed of course has been popping a lot of liquidity into the system a lot of air into the system in the form of very low interest rates and of course this massive bond -- purchase.
Tapering everybody's wondering when that will happen -- You say it'll extend through at least the end of this year when do you see tapering begin you say you have met with the Federal Reserve and treasury.
For -- statement.
But you've just indicated to to the audience we know we have to make assumptions and our assumptions are not.
That would be a continuation.
Of that -- to -- easing.
All of the -- until the end of 2013.
We believe it was appropriate that it's been very helpful and we hope that it continues.
Until the end of 2013.
How about give -- -- a thousand according to him.
Depending on circumstances some particularly if unemployment improves and if inflation is you know.
Heading up -- -- -- -- then hopefully.
The monetary policy that has been put in place will gradually.
Unwind over time with good communication.
We have so much more to speak with madame Lagarde about and guess what this conversation continues at 3 PM eastern on countdown -- the closing bell.
We'll talk about the Euro -- any other Cyprus disaster is coming around the corner so much more to discuss and more on the Federal Reserve.
When the tapering begins at how graceful and delicate it really has to be she's got some pointed thoughts on that Dennis you know you -- the point at the top of the show about.
How the economic numbers in the US actually look pretty good therein lies the feds -- not drama.
When they do start to tighten rates will our US financials hold up I will ask Christine -- that very question to Fox Business exclusive we'll see you for a whole fresh new part of the interview it.
3 PM eastern on capped out at the closing bell back to you -- New York.
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