IMF chief calls on US to raise borrowing limit

[July 11, 2011]  WASHINGTON (AP) -- The International Monetary Fund's new chief says there would be "real nasty consequences" for the U.S. and global economies if the U.S. fails to raises its borrowing limit.

Christine Lagarde tells ABC's "This Week" that interest rates would rise and stock markets would fall.

The U.S. borrowing limit is $14.3 trillion. Obama administration officials say the U.S. would begin to default without an agreement by Aug. 2.

Lagarde also discussed the fallout stemming from the sexual assault charges filed against her predecessor at the IMF, Dominique Strauss-Kahn.

She says the scandal caused "a very strange chemistry of frustration, irritation, sometimes anger, sometimes very deep sadness" among the IMF's 2,500 employees.

Lagarde is a former French finance minister. She's the first woman to lead the IMF.

[Associated Press]

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.