Flickering signs of a recovery may be visible in the euro zone, but Christine Lagarde, the managing director of the International Monetary Fund, has called for more monetary easing by the European Central Bank (ECB) to combat falling inflation.
Speaking in Washington on Wednesday at the Johns Hopkins School of Advanced International Studies, Lagarde said there was an emerging risk of what she called "low-flation," particularly in the euro area.
"A potentially prolonged period of low inflation can suppress demand and output—and suppress growth and jobs. More monetary easing, including through unconventional measures, is needed in the euro area to raise the prospects of achieving the ECB's price stability objective," she said.
Investors will be focused on events in Frankfurt Thursday where the Governing Council of the ECB meets; most market watchers are not expecting a cut to its main interest rate.