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Europe not to follow U.S. to raise benchmark rate

Staff Writer |
Europe will not follow U.S. to raise the benchmark rate in 2017, said an expert with the Center for European Economic Research (ZEW).

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Professor Friedrich Heinemann, head of the "Corporate Taxation and Public Finance" research department, made the comment in a latest news release of ZEW.

He said "the U.S. Federal Reserve decided to raise its benchmark rate, a move which Europe won't follow suit in 2017."

He explained that the European Central Bank (ECB) currently has no leeway, and the inflation rate in the eurozone still remains well below the 2 percent target rate.

According to the professor, the recent uncertainty surrounding Italy's debt of 2.2 trillion euros, as well as its high level of non-performing loans on banks' balance sheets, also renders interest rate hikes much too risky.

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