IMF cheers ECB rate cut, sees slack in euro zone

Reuters

WASHINGTON (Reuters) - The International Monetary Fund welcomed the decision by the European Central Bank to cut interest rates on Thursday, saying the move could help boost current weak growth in the euro zone.

"The decision is fully warranted by the weak inflation dynamics and substantial slack in the economy," IMF spokesman Gerry Rice told reporters.

He said the IMF was also watching potential deflation in the euro currency bloc, and saw an "intensifying" downward push on prices in certain countries, particularly in the periphery.

The ECB unexpectedly cut rates to a record low and said it would prime banks with liquidity into 2015 to prevent the euro zone's recovery from stalling as inflation tumbles.

(Reporting by Anna Yukhananov; Editing by James Dalgleish)

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