Europe’s interest rate debate

EPA/JULIEN WARNAND

International Monetary Fund Managing Director Christine Lagarde (L) and Mario Draghi the President of the European Central Bank (ECB) (R) at the start of a Eurogroup meeting of Finance ministers in Luxembourg, 18 June 2015

Europe’s interest rate debate


The International Monetary Fund is urging Central Banks to hold on to low-interest rates, as medium-term growth prospects have weakened. This includes the Fed, the Bank of England, the Bank of Japan, and the European Central Bank. On Sunday, Christine Lagarde raised the specter of an emerging market spillover to mature economies and urged for further, albeit unorthodox, quantitative easing.

Her position reflects the status quo. Across developed economies, interest rates are close to zero. Swe...


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