ECB May Need to Cut Rates Given Deflation Risk, IMF Says
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The European Central Bank should keep interest rates low for the foreseeable future and may need to cut them further given the risk of deflation, the International Monetary Fund said.
Euro-area inflation will slow to 1.6 percent in 2013 “and risks from domestic wages and profits are to the downside,” the Washington-based IMF said in its World Economic Outlook today. “The probability of falling prices is unusually high, reaching almost 25 percent. This projection gives the ECB ample justification for keeping policy rates very low or cutting them further.”