PARIS (MNI) – Despite growing uncertainty in the global economy,
the European Central Bank’s signal for an imminent tightening of
monetary policy remains valid, according to Governing Council member
“Strong vigilance is the message that has been given and that is
still relevant,” the Austrian central bank president told Reuters in an
interview published Monday, noting that the Council will study new
developments in the run-up to its April meeting.
Nowotny assessed the outcome of last week’s summit of Eurozone
leaders as positive overall: “The hope is that the new features that
have been decided last Friday will also bring more market efficiency and
transparency to the markets.”
“It has been agreed the [EFSF] may buy bonds from governments
directly,” he said. “But of course one has to be quite aware, always
with added conditions.”
As a result, the risk of sovereign default has receded, Nowotny
said, according to Reuters. He argued that Portugal has no immediate
need to tap the rescue fund.
It is still too early to end definitively the ECB’s bond-buying
program, Nowotny said, but added that once it is no longer necessary, it
need not be extended.