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.”

Bloomberg

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