BERLIN (MNI) – ECB Governing Council member Ewald Nowotny said
Monday that the Eurozone could fall into recession for some time but
might improve again the second half of this year.
“The outlook for the Eurozone is stagnation, or we could have a
recession for a certain time,” the Austrian central bank governor said
at an event organized by the Keynes society here. But “in the second
half of 2012 it could already be better again,” he added.
One has to be “very cautious” about the outlook for the Eurozone,
he said. “It is an illusion to believe we are in a short-lived crisis.”
As to inflation, the central banker sees an “all-clear for price
stability,” predicting that Eurozone inflation “will be markedly below
2% in 2012.”
Commenting on the sovereign debt crisis in the Eurozone, the
Governing Council member argued that “the euro is functioning fully and
its prospects remain completely unchallenged.”
Regarding the ECB’s SMP bond-buying program, Nowotny reasoned that
the German view on the program is “too dramatic.” He called the volume
of the SMP rather small. “It is certainly not quantitative easing,” he
stressed.
The ECB’s three-year tender operations are currently necessary to
prevent a “massive credit tightening” in the Eurozone, Nowotny
explained. But these tenders remain unconventional measures and are “not
a new normality,” he pointed out.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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