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Interest rates in Italy and Spain too high, IMF says

EU needs banking union to ensure stability

Interest rates in Italy and Spain too high, IMF says

New York, March 6 - Interest rates in Italy and Spain remain too high in spite of European Central Bank (ECB) directives, the International Monetary Fund (IMF) said on Wednesday. "In spite of the ECB's efforts, transmission of its monetary policy remains limited", said IMF European Department Director Reza Moghadam. Even before the latest eurozone GDP data and the Italian elections threw a long shadow over Europe, economists were having a hard time explaining why markets remain upbeat while labor and production slump, Moghadam added. "Growth will probably continue sluggish for some time, to the detriment of governments and banks", he said. The ECB's bond buying program relieves some of the pressure, but the EU needs a banking union to ensure financial stability, according to Moghadam.

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