IMF presses ECB to act soon against deflation

The International Monetary Fund on Tuesday urged the European Central Bank to act as soon as possible to fend off the deflation threat, amid worries about weak eurozone growth. IMF chief economist Olivier Blanchard said the ECB had already studied the various stimulus measures it could take to boost spending and investment, including quantitative easing, negative interest rates, and securitization programs. "I think they should all be looked at, and I know that the ECB is looking at them," he told reporters. "And we hope that they will implement them as soon as they are technically ready to do so." Blanchard said deflation or low inflation could make it difficult for both the region and the individual 18 eurozone countries to continue rebuilding after the sharp contraction. "Everything should be done to try to avoid" deflation, he said. ECB officials have resisted the IMF's suggestions, assuring that they see growth picking up, even as they study backup plans. On April 3, following a monetary policy review that saw no new actions decided, ECB chief Mario Draghi brushed away IMF pressure, saying the bank would act as it thought fit. "The IMF has been extremely generous in its suggestions on what we should do or not do... We are really thankful for that," he said. "But the viewpoints of the (ECB) governing council are in a sense different," Draghi said, suggesting the Fund was out of line giving unsolicited advice to Europe's central bankers. "I frankly would like the IMF to be as generous as they have been toward us also with other monetary policy jurisdictions like issuing statements just the day before an FOMC meeting would take place," he said. On Monday ECB vice president Vitor Constancio defended the bank's inaction to a European parliamentary committee, telling lawmakers inflation is not weak only in the eurozone, but everywhere else.