IMF chief sees growth, overheating, debt risks from US tax cuts

International Monetary Fund managing director Christine Lagarde said she saw positive and negative effects from a "complicated" US tax overhaul, including a near-term growth bump that risks overheating the US economy and a problematic rise in debt. Lagarde told Reuters in an interview on Thursday that tax cuts can lift the US growth rate by about 1.2 percentage points over the three years through 2020, which should help boost global growth and trade for at least a few years. "To the extent that growth is higher in the US and because the US is a very open economy, it will probably increase the demand from the US to the other economies around the world, and that's also a positive," Lagarde said during a week-long trip to Indonesia. The massive tax overhaul, which cuts the top corporate rate from 35 per cent to 21 per cent and simplifies many provisions, met some of the IMF's advice that Washington adopt a simpler, more efficient business tax code. But Lagarde warned the plan threatened to stoke inflation. "Because of the stimulus impact that it will have on growth, and because the US economy is already growing at full capacity, it might very well have an overheating impact on the...