ECB’s Axel Weber says there are growing signs the economic decline in Germany and the euro zone is ebbing, but warns that the signs of hope are sporadic and should not be overplayed.
Weber hopes the impact of government stimulus programs will build throughout the rest of the year.
ECB’s main interest rate is seen as appropriate for current enviromment. The ECB’s decisions to lend banks unlimited funds for up to 12 months and buy about 60 bln euros worth of covered bonds should have a positive impact on the financing conditions for banks and companies.
Weber feels the ECB could easily exit its provision of extra liquidity to euro zone banks, and this is seen as important to head off possible inflationary risks and prevent future asset price bubbles.
Weber warns that EU states must reduce budget deficits as soon as the worst of the crisis is over.
