International Monetary Fund (IMF) managing director Christine Lagarde suggested on Monday that global growth forecasts will be reduced next month.

Speaking at the Peterson Institute for International Economics, Lagarde said that a gradual recovery is still expected but growth is likely to be a bit weaker than was anticipated in July.

Lagarde pointed to uncertainty as the main culprit, especially over whether policymakers will deliver on promises. "The global economy is still fraught with uncertainty," she said. "The situation is a bit like a jigsaw puzzle ... We need all the pieces to come together."

Lagarde said that the stimulus being applied by central banks were "big policy signals in the right direction."

The IMF chief also identified the need for a strong and efficient banking union that should be initiated as soon as possible "to break the vicious cycle between banks and sovereigns" as well as a plan for a fiscal union.

"Europe obviously remains the epicentre of the crisis and where the most urgent action is needed," she said.

Lagarde did not lose sight of Greece and its financing gap. She said that Greek debt "will have to be addressed as part of the equation."

SC

Related share prices