(Finance) – Europe has avoided going into recession this winter and has shown resilience but is now facing “a triple challenge: defeating inflation, sustaining the recovery and safeguarding financial stability”. That’s what the said director of the European Department of the International Monetary Fund, Alfred Kammer opening the press conference on prospects for Europe. “The prospects for Europe are one of low growth and persistent inflation. And the situation could easily become more difficult – warned Kammer – if, in a context of tight labor markets, there is a re-acceleration of prices or if geopolitical fragmentation were to affect the growth or push inflation in turn. Maintaining financial stability will require close monitoring, strong vigilance and corrective actions when necessary. European banks’ capital and liquidity cushions are comfortable,” but one should not “complace oneself,” adds Kramer, noting how structural reforms should prioritize medium-term growth support.
Central banks in Europe – second kammer – should maintain a restrictive policy until core inflation it is clearly not declining towards the targets. “Further increases are required in the euro area – said the director of the European Department of the IMF. In many countries, governments should pursue more ambitious budget consolidation than planned. This is necessary to steer inflation on the path to meeting the fiscal consolidation would allow central banks to meet their targets at lower interest rates, reduce debt costs and support financial stability”.
For Kammer the Mes is important for completing the banking union. “Mes – said kammer – is an important architectural element for the Banking Union, and one that would help all countries. It is important to complete the Banking Union.”
On the front of European energy security Kammer feared “certain risks for the winter of 2024, especially on the price front. But in general – he specified – the risks are much lower than in 2022-2023”.