ECB should cut rates, allow higher inflation: Lagarde

Published March 08, 2013

| Reuters

The European Central Bank should cut interest rates further and strong economies such as Germany should allow higher inflation and wage growth, the head of the International Monetary Fund said on Friday.

"Monetary policy should remain accommodative, and we believe that there is still some limited room for the ECB to cut rates further," Christine Lagarde said in remarks prepared for a speech to be delivered on an official visit to bailed-out Ireland.

"Restoring a sense of balance means lower inflation and wage growth in the south (of the euro zone), but it also might mean allowing somewhat higher inflation and wage growth in countries like Germany. This too is an aspect of pan European solidarity."

(Reporting by Padraic Halpin and Conor Humphries; Editing by Ruth Pitchford)

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