Low inflation can hit European growth : IMF chief

July 19, 2014 00:00:00

PARIS, France: IMF Chief and French former minister Christine Lagarde gestures as she speaks during a meeting dedicated to euro and entitled \"Eurozone, what a future\" organized by the Robert Schuman Fondation (a think tank on Europe), in Paris Friday. L

PARIS, July 18 (AFP): IMF chief Christine Lagarde warned on Friday that low inflation could damage growth in Europe and urged the European Central Bank to maintain a flexible policy.

"Obstinately low inflation can seriously undermine growth," said Lagarde, who recently hinted that the 3.6 per cent global growth forecast for 2014 may have to be trimmed.

But the "good news," Lagarde said, was that "European economies are beginning to emerge from the crisis."

She said: "We are seeing this in a certain number of indicators.

We are also seeing this in the very positive orientation of markets, perhaps a little too positive in respect to fundamentals."