IMF warns QE tapering could trigger fresh eurozone crisis

The International Monetary Fund (IMF) has warned if the US Federal Reserve begins tapering monetary stimulus, the weakest eurozone countries could be pushed into a "debt-deflation spiral".

In its annual 'Article IV' health check on the eurozone, the Fund said the economic backdrop in the region "continues to deteriorate". "Recovery remains elusive," the report stated. "Growth has weakened further and unemployment is still rising, and the risks of prolonged stagnation and inflation undershooting are high." Talks of QE tapering has caused government bond yields to rise across the eurozone. Further action from the Fed to slow down monetary stimulus "could lead to additional, unhelpful, pro-cyclical increases in borrowing costs within the euro area", the report warned. I...