International Monetary Fund warns Europe against prematurely declaring victory over inflation

By DAVID McHUGH
AP Business Writer

FRANKFURT, Germany (AP) — The International Monetary Fund says the European Central Bank and other policymakers across Europe need to keep interest rates at current elevated levels until they’re sure inflation is under control despite sluggish growth. The Washington-based IMF says cost of underestimating inflation’s persistence could be painfully high and result in another painful round of rate hikes that could rob the economy of a large chunk of growth. The IMF said in its twice-yearly regional economic outlook for Europe that the European Central Bank and the other central banks that aren’t part of the 20-country eurozone are reaching the peak of their interest rate cycles. Inflation in the eurozone peaked at 10.6% in October 2022 and has steadily fallen to 2.9% in October.