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IMF Officials ‘Fully Support’ European Central Bank Rate Cut

Nov. 3 (Bloomberg) -- The International Monetary Fund said it welcomed the European Central Bank’s unexpected interest rate cut today.

“We fully support the interest rate reduction announced this morning which reflects the decrease in inflationary pressures and the intensified negative outlook for the euro zone,” IMF spokesman David Hawley told a news conference in Washington today.

ECB officials lowered the benchmark interest rate by 25 basis points to 1.25 percent, confounding 51 of 55 economists in Bloomberg News survey.

Hawley declined to answer repeated questions on Greece, including rumors of Greek Prime Minister George Papandreou possibly resigning and the country exiting from the euro area. He instead referred to comments IMF Director Christine Lagarde has made in Cannes, France. She is there along with global leaders and finance ministers for the G-20 summit to discusss the euro-area sovereign debt crisis.

“As soon as the referendum is completed, and all uncertainty removed, I will make a recommendation to the IMF Executive Board regarding the sixth tranche of our loan to support Greece’s economic program,” Lagarde said in an e-mailed statement yesterday.

Italy, Libya

Hawley said that there has been “no request for financing” from Italy, and that the lender would take a mission to Libya shortly.

Hawley said of Libya: “The areas where we will be discussing with the authorities are preparation of macroeconomic framework, an assessment of public financial management capacity, an estimation of financing needs and assistance that we might provide in restoring central bank and the payment systems operation.”

To contact the reporters on this story: Cheyenne Hopkins at Chopkins19@bloomberg.net;

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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