ECB member Ewald Nowotny speaks in London
- We are at an important turning point in monetary policy
- We have very strong economic expansion, but an unequal one
- Inflation still below target is one of the main issues ECB has to discuss
- Inflation is at the core of normalising policy
- Tightening of monetary policy is even more complex due to huge scale of recent stimulus
- There is a risk of stifling recovery if ECB tightens too soon
- There is a risk of a boom in assets if ECB tightens too late
- ECB framework is well equipped to cope with evolving inflation debate
- Now is the time to start gradual normalisation of monetary policy
- Inflation pressures will materialise eventually
Not much insights by Nowotny as he is playing the Goldilocks card. I don't think market participants know what to make of it either.
His last two comments there highlights what exactly the ECB is doing right now. They're looking to tighten monetary policy while at the same time hoping for inflation to tick higher. Better cross your fingers instead of leaving them open then.
