FRANKFURT (MNI) – In the current environment of high public debts,
further economic stimulus measures would be “playing with fire”,
International Monetary Fund chief economist Olivier Blanchard said in an
interview published Thursday.
“Now is not the time for fiscal stimulus,” Blanchard the told the
German daily Frankfurter Allgemeine Zeitung, specifying that neither the
Eurozone nor the U.S. had leeway for such policies.
On price developments, Blanchard said, “We have avoided the trap of
deflation” in Europe and the U.S., But there was still much to do
regarding the banking sector, “especially in Europe”, he said.
Addressing German concerns that loose monetary policy is fueling
inflation rather than growth, Blanchard said it was a “simple matter of
arithmetic” that some countries would have to deal with above-target
inflation for some time.
“In many countries, it would better to have inflation below 2% so
that they would more capable competitively,” Blanchard said. “If we have
0% or even lower in the southern Eurozone countries, Germany, France and
others must have [inflation] higher than 2%.”
— Frankfurt bureau: +49 69 720 142; email: frankfurt@mni-news.com —
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