High debt, low growth conundrum gets IMF staff treatment

International Monetary Fund headquarters

A new International Monetary Fund (IMF) staff discussion paper says countries aiming to deleverage should keep monetary policy loose, but warns that attempts to inflate away public debt could undermine the credibility of monetary frameworks built up over the past three decades by un-anchoring inflation expectations.

According to the IMF, unanchored inflation expectations could reduce the demand for debt of longer tenor, further eroding any upside from higher inflation – ultimately reducing econo

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