The European Central Bank must carefully calibrate monetary policy to avoid a hard landing in the continent’s economy but should continue to focus on bringing down inflation, according to Kristalina Georgieva, managing director of the International Monetary Fund.
(Bloomberg) — The European Central Bank must carefully calibrate monetary policy to avoid a hard landing in the continent’s economy but should continue to focus on bringing down inflation, according to Kristalina Georgieva, managing director of the International Monetary Fund.
“It is possible” to avoid a hard landing, she said in an interview with Bloomberg TV Friday. “But yes, the path is narrow.”
“This is the problem for Europe: growth slowing down, but inflation not following suit as fast as possible,” she said. “Ergo, focus on bringing inflation down.”
She spoke a day after the ECB raised borrowing costs and warned that another increase next month is very likely.
Georgieva said the IMF still is projecting “positive growth” in Europe this year, roughly in line with its April forecast of 0.8%.
“The ECB started somewhat later than the Fed, and the situation in Europe is somewhat different from the situation in the US,” she said, noting the greater impact higher energy prices have had on the continent.
“The actions of the Fed are showing that there is some softening of the economy,” she said. In Europe, by contrast, “restaurants are full, people are at work,” she said.
Among advanced economies, 90% are seeing slowing growth, Georgieva said.
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