The Bush administration, rebuffed initially in its effort to arrange global interest rate reductions, said Monday that more must be done to promote growth because worldwide economic recovery was not guaranteed.
In a speech to the policymaking committee of the International Monetary Fund, Treasury Secretary Nicholas Brady continued to press the case for lower interest rates both in the United States and in other foreign countries as the best way to get America out of a recession and ensure that the U.S. downturn does not spread into a global slump.In an appeal for cooperation among the world's richest industrial countries, Brady said, "While each country looks to its own interests, we must work collectively to achieve our common objectives of freedom and prosperity."
Brady noted some encouraging signs that the U.S. economy, which accounts for one-fourth of total world output, was on the verge of rebounding from the recession that began last July.
But he added, "A recovery of world economic activity is by no means certain. In these circumstances, monetary and fiscal policies should be directed to providing the basis for lower real interest rates and a sustained global economic recovery with price stability."
Brady's remarks Monday followed an unusual appeal on Sunday by President Bush to other members of the rich-country club - Japan, Germany, Britain, France, Canada and Italy - to follow the U.S. lead in lowering interest rates to boost world demand.
Despite the president's appeal, the Group of Seven countries rejected any promises for coordinated cuts in interest rates in a joint statement issued following a six-hour meeting on Sunday.
In effect, the United States and the chief opponent of the interest rate cuts, Germany, continued the argument Monday in their formal addresses at the opening of the spring meetings of the IMF.
German Finance Minister Theo Waigel told the IMF group that any effort to make sure that the world does not fall into a global recession must be done with a watchful eye toward containing inflation.