–Says ECB’s Current Monetary Policy Stance Is Appropriate
BRUSSELS (MNI) – Avoiding a vicious cycle is the biggest challenge
facing policy-makers, and that is the key aim of the bold measures taken
recently, European Central Bank Governing Council member Ewald Nowotny
said on Tuesday.
“The big challenge is to prevent a vicious circle,” he said, adding
that the “bold measures should be seen exactly as a way to avoid such a
vicious cycle.”
“We have been able to prevent a meltdown of the world economy,”
Nowotny told delegates at a conference here.
The ECB slashed interest rates and deployed a range of
unconventional measures to help shore up the Eurozone economy during the
financial crisis, including generous lending and buying bonds on the
secondary market.
Some market-watchers say the most recent round of extraordinary
action, particularly the purchase of government debt, has dented the
central bank’s credibility and undermined the perception that it is
politically independent.
Nowotny said the ECB was a “fiercely independent central bank.”
“From our point of view, our present monetary policy stance is
appropriate,” he said, adding that the central bank wasn’t engaging in
any form of quantitative easing, because it was sterilizing its
purchases of government bonds.
Nowotny also highlighted the challenge facing Europe’s public
finances.
“In general, the good times were not used” to build up reserves for
the bad times, he said, “and this is something that has to be taken up
now.”
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
[TOPICS: M$$EC$,M$X$$$,M$$CR$,MGX$$$]
