FRANKFURT, Germany (AP) — The European Central Bank and other policymakers across Europe need to keep interest rates at current elevated levels until they're...
FRANKFURT, Germany — The European Central Bank and other policymakers across Europe need to keep interest rates at current elevated levels until they're sureThe Washington-based IMF said that cost of underestimating inflation's persistence could be painfully high and result in another painful round of rate hikes that could rob the economy of a large chunk of growth.
Alfred Kammer, director of the IMF's Europe department, warned against “premature celebration" as he spoke to journalists in connection with the outlook. “It is less costly to be too tight than too loose" with interest-rate policy, Kammer said. The ECB, which halted its rate increases at its Oct. 26 for the first time in over a year, “is in a good spot,” he said.
It forecasts growth of 0.7% for this year for the eurozone and 1.2% next year. If inflation falls faster than expected, it will boost consumer real income and spending and growth might improve. But an escalation of Russia's war against Ukraine and accompanying increased sanctions and disruptions to trade could mean weaker growth.
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