Tuesday, September 20, 2011

IMF says ECB should cut rates if conditions worsen

WASHINGTON: The European Central Bank will need to ease monetary policy if economic conditions continue to deteriorate, the International Monetary Fund said on Tuesday.

"If downside risks persist, the ECB should cut rates," said IMF senior economist Jorg Decresson.

"At this stage it is still a bit early but there are many indicators pointing to these downside risks persisting, and consistent with that, if the economy does not take a turn for the better there will be a need to cut rates," he said at a news conference on the IMF's World Economic Outlook.

Asked about Italy's ratings downgrade by Standard and Poor's, Decresson did not comment directly but said that its government must remain focused on boosting output and deficit reduction.

"The issue here is the growth rate, which is relatively low, so the challenge there is for the government to continue to implement its plans with respect to fiscal consolidation and at the same time to embark on fiscal reforms to promote growth," he said. ' Reuters


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