New York Times columnist Jack Ewing reports on the International Monetary Fund’s warning of “a sizable risk” of deflation in the euro zone. In a report on euro zone policies, the IMF called on the European Central Bank to begin buying government bonds in attempts to hold down borrowing costs for troubled countries. Deflation in European countries like Greece, Italy and Spain would make it difficult for them to get government debt under control. According to the article, “I.M.F. staff said there was a 25 percent risk of consumer price deflation before 2014, and that the danger was greatest in countries like Italy where growth is slow and tax increases have made inflation appear higher than it really is.”
You can read the article here.