IMF releasing views on the EU
- Euro zone may face the long period of anemic growth and inflation
- sees GDP growth of 1.3% and inflation at 1.3% 2019
- rising risks for euro zone economy, especially trade tensions, impact of Brexit, Italy's debt woes
- under shooting of euro zone's inflation objective calls for prolonged monetary accommodation
- EUROs real exchange rate as slightly undervalued, urges Germany, other trade surplus states to invest more
- ECB's intention to maintain ample accommodation for longer is vital
- ECB should short maturity of new TLTROs, offer less generous pricing terms than on TLTRO II to avoid banks increasing their sovereign exposure
- possible tiered deposit rate would have very small impact on aggregate bank profitability and questionable impact on credit conditions
- direct costs of negative rates are likely to outweigh by their positive indirect effects on aggregate demand and bank profitability
- if further accommodation required, ECB should consider new asset purchase program anchored by P and possibly broaden to larger set of assets
- ECB may have only limited room to cut interest rates
- further credit easing measures could be considered, including new cheaper liquidity facilities for banks
- multiple money laundering breaches at EU banks at urgency to centralized supervision
