IMF paper urges policymakers to address sovereign rating spillovers

IMF headquarters in Washington DC

With a fresh round of downgrades for eurozone peripherals announced on Tuesday, a research paper published by the International Monetary Fund (IMF) could not be timelier.

Standard & Poor's (S&P), one of the big three credit rating agencies, lowered Portugal's sovereign rating from BBB to BBB–, just one notch above junk status. Greece was taken down two notches to BB– from BB+. Both downgrades were made just as an IMF working paper announced that exactly this type of news can have wide-reaching

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