The European Central Bank (ECB) should contemplate quantitative easing if inflation in the single currency bloc remains low for a protracted period, says International Monetary Fund (IMF) Managing Director Christine Lagarde.
“If inflation was to remain stubbornly low, then we would certainly hope that the ECB would take quantitative easing measures by way of purchasing of sovereign bonds,” Lagarde told CNBC on Thursday.
She defines “stubbornly low inflation” as prices remaining well below target in spite of measures being taken to boost inflation. Euro zone consumer prices rose by just 0.5 percent year-on-year in May, down from 0.7 percent in April and well short of the ECB’s target of close to 2 percent.
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