22 May 2012 12:01 [Source: ICIS news]
LONDON (ICIS)--The ?xml:namespace>
At a meeting with chancellor George Osborne in London, IMF managing director Christine Lagarde said the
She added that the
In a statement, the IMF said evidence suggests that QE can continue to support demand by lowering long-term interest rates and improving banks’ liquidity.
It added that the Bank of England's Monetary Policy Committee should also reassess the efficacy of cutting the policy rate below its current level of 0.5%.
The IMF said that the
“Much of this underperformance relative to earlier expectations is due to transitory commodity price shocks and heightened uncertainty following the intensification of stress in the euro area,” it added.
The IMF said setbacks in the eurozone are the key risks to economic prospects and financial stability in the
“An escalation of stress in the euro area could set off an adverse and self-reinforcing cycle of lower confidence and exports, higher bank funding costs, tighter credit, and falling asset values, resulting in a substantial contractionary shock,” it added.
It said eurozone GDP is forecast to contract by 0.1% this year, before picking up to 0.9% in 2013.
At 10:22 GMT, the FTSE was trading up by 0.79% from the previous close.
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