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Getting to grips with the era of 'the new mediocre'

Washington

FINANCE ministers and central bankers converging on Washington for last weekend's annual meetings of the International Monetary Fund (IMF) and World Bank were confronted with a paradox: why were they having to worry about the prospect of rising interest rates at a time when large parts of the global economy appear to be fragile?

The answer was given by IMF managing director Christine Lagarde, who commented that pressure to raise interest rates is driven by the need to control escalating financial market risks, even if that threatens already wobbly recovery and risk-averse economic behaviour. There is "too much financial risk-taking and not enough economic risk-taking", she said.

The global...

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