Recommending central banks in Europe maintain restrictive policy

Alfred Kammer, Director of the European Department at the International Monetary Fund (IMF), said on Friday that they recommend central banks in Europe to maintain restrictive monetary policy for as long as necessary, per Reuters.

Kammer added that they think the European Central Bank and the Bank of England are in the ‘right spot’ on rates but noted that flexibility is needed given the uncertainty.

“Central banks need to be ready for negative surprises on inflation; they should sit tight if positive inflation surprises come, avoid premature easing,” he said.

Market reaction

These comments failed to trigger a noticeable market reaction and the EUR/USD pair was last seen trading flat on the day at 1.0525.