IMF sees up to 20 pct chance of prices falling in Europe

WASHINGTON Tue Jan 21, 2014 10:23am EST

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WASHINGTON Jan 21 (Reuters) - There is as high as a one-in-five chance that prices could start to fall in the euro zone, the International Monetary Fund's chief economist said on Tuesday.

"Our model gives a 10 to 20 percent probability to inflation turning negative (in the euro zone)," Olivier Blanchard told reporters on a conference call, adding that the IMF still sees positive price growth in its baseline forecasts.

He called on the European Central Bank to do all it can to anchor price expectations and boost demand in the euro currency bloc, where southern countries like Portugal and Greece continue to face weak demand.

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