Euro inflation is 'uncomfortable'

The ECB has kept interest rates at 4% since June 2007

Eurozone interest rates should not fall because inflation is at "uncomfortably high levels", the International Monetary Fund (IMF) has said.

Eurozone inflation was 3.6% in May, well above the European Central Bank's (ECB) target rate of about 2%.

But the IMF predicted that the rate would fall below 2% late next year without a rate rise.

The IMF also revised its forecast for eurozone growth this year upwards from 1.4% to 1.75%.

"In these circumstances, it is appropriate to keep policy rates on hold," its report said.

The IMF also reported on the Russian economy on Monday.

It said the rouble should be allowed to appreciate to prevent the economy from overheating, but warned that inflation could still hit 14% this year.

The organisation said that a stronger rouble would not damage the competitiveness of Russian companies.