Euro area inflation projected to remain weak: IMF

Ongoing wave of infections highlights continuing risk that pandemic poses to recovery, institution says

Övünç Kutlu   | 07.12.2021
Euro area inflation projected to remain weak: IMF


Inflation in the euro area is projected to remain weak despite recent price increases, the International Monetary Fund (IMF) said Monday. 

The international financial institution said in a statement that policy coordination remains key in the post-pandemic economic recovery phase.

"Fiscal, monetary and financial sector polices have worked well together to dampen the effect of the [coronavirus] pandemic on the real economy," it said in a statement.

"Fiscal policy should remain supportive but become increasingly targeted as the recovery continues.”

The IMF said the fiscal framework should be reformed to make it more efficient at preventing debt distress while allowing adequate room for macroeconomic stabilization.

"On the downside, the ongoing wave of infections and renewed concerns about newer and more transmissible COVID-19 variants highlights the continuing risk that the pandemic poses to recovery, especially if it were to be accompanied by decreased vaccine effectiveness or incomplete vaccination coverage," it added.

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