WASHINGTON (Reuters) - The IMF said on Thursday it backs the European Central Bank’s interest rate cut and its aid to Greece is tied to the country, rather than a specific government, and would continue as long as its terms were met.
The ECB cut rates by 25 basis points to 1.25 percent in a surprise move to support the euro zone economy in the first meeting chaired by new ECB chairman Mario Draghi, previously Italy’s top central banker. The IMF had previously called for the ECB to ease monetary policy.
“We fully support the interest rate reduction announced this morning which reflects the decrease in inflationary pressures and intensified negative outlook for the euro zone,” IMF spokesman David Hawley told a news conference.
Hawley declined to comment directly on reports the Greek government was on the brink of collapse but said the IMF loan program was tied to the country of Greece.
“Our programs are with countries. If the authorities in any country continue to implement the program, then the fund is in a position to continue the program,” Hawley said.
The sixth tranche of the IMF loan to Greece was put on hold pending the outcome of a planned Greek referendum vote on the European bailout plan for the debt-laden country. At the Group of 20 major economies’ summit in Cannes, France, IMF managing director Christine Lagarde said she would make a recommendation on the next tranche to the IMF board “as soon as the referendum is completed, and all uncertainty removed.”
Hawley declined to elaborate on what would have to happen for the IMF to consider that all uncertainty was removed.
He said that after the Cannes G20 summit, Lagarde would travel to Moscow on November 7-8, then visit Beijing on November 9-10, followed by a stop in Tokyo. She will visit with government authorities in all three capitals, and would make public speeches and hold news conferences in Moscow and Beijing.
Asked about Japan’s most recent currency intervention to halt the rise of its yen, Hawley reiterated the IMF’s previous statements about the yen, saying that as of late last year it was broadly in line with medium-term fundamentals, but has risen rapidly since then. If the rise were to be sustained, the IMF would have to reconsider its assessment of the yen, he said.
Hawley also said that IMF would begin a mission to Pakistan later this month for consultations on the Fund’s annual assessment of Pakistan and a loan program that and a loan program that expired on September 30.
The IMF also will “soon” begin a mission to Libya to help the civil war-torn country develop an economic framework and estimate its financing needs, Hawley said, adding that exact timing had not yet been set.
The IMF board in November also will discuss possible revisions to its some of its lending tools, reflecting work that has been underway for some time, he said.
Reporting by David Lawde