- POSTED: 06 Jun 2014 04:17
The International Monetary Fund hailed the European Central Bank's unprecedented moves to prevent deflation in the Eurozone, including cutting key interest rates to new all-time lows.
WASHINGTON: The International Monetary Fund (IMF) hailed the European Central Bank's (ECB) unprecedented moves on Thursday to prevent deflation in the Eurozone, including cutting key interest rates to new all-time lows.
"We strongly welcome the very proactive stance taken by the ECB today," said IMF spokesman Gerry Rice.
"And we're encouraged that president (Mario) Draghi indicated that the ECB would be willing to do more if necessary."
After a monetary policy meeting on Thursday, the ECB announced rate cuts, including a move that puts its deposit rate in uncharted territory at negative 0.10 per cent, meaning banks will have to pay the ECB to hold their cash.
The cuts were accompanied by a package of new liquidity measures aimed at boosting bank lending, which has been declining for months.
Backing the decision for the bold moves, the ECB also said it was lowering its inflation forecast for the 18-nation Eurozone this year to just 0.7 per cent, far below its target.
The IMF had been urging the ECB for months to take action to head off deflation as the fragile recovery in the Eurozone spawned weak inflationary pressures.
But ECB chief Draghi previously had brushed away IMF pressure.
"The IMF has been extremely generous in its suggestions on what we should do or not do... We are really thankful for that," Draghi said in early April.
"But the viewpoints of the (ECB) governing council are in a sense different."