IMF Cuts Growth Forecast

Europe’s crisis threatens to derail the global economy, fund says.

The International Monetary Fund cut its forecast for global growth and warned that the European debt crisis threatens to derail the world economy.

“The epicenter of the danger is Europe but the rest of the world is increasingly affected,” Olivier Blanchard, the fund’s chief economist, said today at a news conference in Washington. “There’s an even greater danger, namely that the European crisis intensifies. In this case the world could be plunged into another recession.”

Bond Purchases

The Frankfurt-based ECB also has bought 217 billion euros of bonds from distressed member countries since May 2010. It kept its benchmark interest rate at 1 percent this month following two straight reductions.

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