IMF recommends higher interest rates in euro-zone

Analysis

The International Monetary Fund (IMF) on Tuesday said higher euro-zone interest rates could be necessary to keep inflation in check in the near future.

Though inflation in the euro area has so far been running in line with the European Central Bank’s 2% ceiling, the fund’s executive board said that “inflationary pressures could be expected to build gradually and some further tightening might be required.” The ECB in July kept interest rates steady at 4%, but many analysts expect a quarter-point raise at the bank’s next meeting in September.

The International Monetary Fund board offered an overall positive view following a meeting on the state of the euro area’s economy, welcoming the “move from recovery to upswing” and predicting “above potential” growth in the region of around 2.5% of GDP for the year. (monstersandcritics.com)

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