The head of the International Monetary Fund Christine Lagarde has said that the Eurozone may need to raise inflation in countries such as Germany and to lower interest rates across the struggling region in order to promote a sustained economic recovery.
Lagarde’s comments were made during a visit to bailed out Ireland and have drawn criticism from some quarters of the economic world. The suggestion of cutting rates is in effect pointless seeing as how the interest rate across the Eurozone is already at a record low of 0.75%. It is though that any further cuts would make little difference. Lagarde reiterated her call to the European Central Bank to keep its monetary policy easy.
“Monetary policy should remain accommodative, and we believe that there is still some limited room for the ECB to cut rates further,” Lagarde said in remarks prepared for a speech delivered in front of an audience that included Ireland’s representative on the ECB governing council, Patrick Honohan.
“Restoring a sense of balance means lower inflation and wage growth in the south (of the Euro zone), but it also might mean allowing somewhat higher inflation and wage growth in countries like Germany. This too is an aspect of pan European solidarity.”
The International Monetary Fund chief said European leaders may need to focus less on headline deficit reduction targets to avoid undermining economic growth and help their recession-hit people as well as seeking to reassure financial markets.
“Improving sentiment is not translating into higher jobs or incomes. It might be helping markets, but it is not yet helping people,” she said.
Current Euro exchange rates
As of 15:15 am
The Euro to Pound Sterling exchange rate is currently trading in the region of 0.8695
The Euro to US Dollar exchange rate is currently trading in the region of 1.2983
The Euro to Australian Dollar exchange rate is currently trading in the region of 1.2678
The Euro to New Zealand Dollar exchange rate is currently trading in the region of 1.5743