IMF Blanchard: no drama if Fed fuels some inflation

PARIS (BestGrowthStock) – International Monetary Fund chief economist Olivier Blanchard said on Thursday it would not be the “end of the world” if the U.S. Federal Reserve’s new monetary easing caused more inflation, given the risk of deflation also exists.

“If it creates inflation, that would not be the end of the world, because in the United States we are in a period where inflation is very low and there is a danger of deflation,” he told French radio Europe 1.

Blanchard said that he thought the U.S. economy would rebound from persistent weakness “because they always rebound.”

The Fed launched a fresh stimulus effort on Wednesday, committing to buy $600 billion in government bonds.

Ahead of G20 summit in Seoul in mid-November, Blanchard was confident that the meeting of leaders from the world’s economic powers would find ways of easing tensions over exchange rate policy.

“I think that we are going to find solutions to what’s been called the currency wars,” he said.

Turning to his native France, Blanchard said an unpopular pension reform that the government recently pushed through despite massive street protests was substantial, though it would not be sufficient over the long term.

(Reporting by Leigh Thomas and Brian Love; Editing by John Stonestreet)

IMF Blanchard: no drama if Fed fuels some inflation