Despite inflation hitting a record high last month in the euro area, the International Monetary Fund said that the rise in prices is transitory and not worrisome.
Annual inflation rate in the zone reached 4.9 percent in November, Reuters reported.
The reason the IMF gave this assessment is that the hikes in consumer prices didn’t turn into wage increases, also known as the second-round effect.
It pointed out that, meanwhile, monetary policy should remain loose.
The international lender also stated that governments in the euro area should continue backing their economies to overcome the adverse effects initiated by the pandemic. The organization added that fiscal consolidation is not urgent, but its plans should be readily available now.
“Policies should remain accommodative but become increasingly targeted, with a focus on mitigating potential rises in inequality and poverty,”the IMF said.
I took a quote from the source since it’s reuters.
Eurozone’s private sector conditions improve following a six-month low in October: Economic wrap