IMF pushes for easing to boost euro inflation

THE INTERNATIONAL Monetary Fund (IMF) yesterday urged the Eurozone to consider bringing in a full-scale quantitative easing (QE) programme, to combat worryingly low inflation.

The global institution argued that the European Central Bank (ECB) should be ready to pursue unconventional measures: “If inflation remains stubbornly low, the ECB should consider a large-scale asset purchase programme, primarily of sovereign assets.”

Inflation in the Eurozone is running at just 0.5 per cent, well below the ECB’s two per cent target. Central bank president Mario Draghi cut one of the currency bloc’s benchmark interest rates into negative territory earlier this month, for the first time in history.

“[QE] would boost confidence, improve corporate and household balance sheets, and stimulate bank lending. Overall, it holds the potential to have a significant impact on demand and inflation,” added the IMF.

Earlier this week, the Centre for Economic Policy Research said that the Eurozone recovery was so weak that it was not yet reasonable to say the region had emerged from recession.

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