IMF Warns About Risks to High Debt Eurozone Countries

The International Monetary Fund said the euro area’s economic recovery “has gained momentum” while it warned that some of the region’s high-debt countries may face difficulties when monetary policy accommodation is reduced.

“The euro area recovery is strengthening and becoming more broad-based,” the IMF said in a statement Thursday following its regular consultations with the 19-nation region. “There should be a renewed commitment to completing the banking union, advancing the capital markets union and creating a common fiscal capacity.”

Still, the Washington-based fund cautioned that “inflation expectations, however, remain subdued, with core inflation at undesirably low levels.” It said countries already operating at capacity should accept inflation above 2 percent “for a prolonged period.”

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.