Nov. 7 (Bloomberg) -- The International Monetary Fund praised the European Central Bank’s move to cut its benchmark interest rate to a record and said it’s watching deflationary pressures in the monetary union.
“We strongly welcome the decision by the ECB today, which we believe can help support the nascent recovery in the euro area,” IMF spokesman Gerry Rice told reporters in Washington today. “The decision’s fully warranted by the weak inflation dynamics and substantial slack in the economy.”
ECB President Mario Draghi today warned that the euro area risks a “prolonged period” of low inflation and pledged to keep borrowing costs low for an “extended period” as the bank cut its main refinancing rate by a quarter point to 0.25 percent.
Rice said the the fund is watching deflationary pressures that have intensified in recent months in some euro-area countries.
Separately, he said IMF Managing Director Christine Lagarde will submit a report to the board by Nov. 13 on Argentina’s progress in improving its inflation and gross domestic product data. The board will then meet to decide whether to take measures against the country, which it censured earlier this year.
“Fund staff had constructive discussions with the authorities on their efforts to improve official data on the consumer price index and the GDP, including technical exchanges on the authorities’ development of the new national consumer price index,” Rice said.
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