–SMP Not Permanent Program And Should Tend To Decline In Size
WASHINGTON (MNI) – The European Central Bank has rules that allow
it to help stabilize markets by purchasing bonds, but quantitative
easing is not possible, Governing Council member Ewald Nowotny said
Friday.
“That is something that is unfortunately a bit under-estimated, by
American observers as well,” Nowotny, who heads the Austrian National
Bank, said in remarks to reporters during the annual meetings of the IMF
and World Bank.
“The ECB has clear rules,” he added. “Those are rules that are even
anchored in the EU Treaty and in the statutes of the ECB. In the
interest of the credibility of the institution, it is absolutely
necessary to adhere to these rules.”
He continued: “Therefore, the ECB, when it is a matter of
stabilizing market conditions, can provide an anchor. That is the
SMP-program.”
Nowotny said he was “personally of the opinion that one always has
to emphasize that it is not a permanent program, and that it is also a
program that in its volume should tend to be reduced. But in no case can
[the ECB] pursue a policy in the sense of the American quantitative
easing.”
Nowotny declined to comment directly on interest rates. “It is an
unwritten law for central bankers that one does not comment in detail on
interest rate developments,” he said. “I can only say that at the ECB,
we naturally orient ourselves to the respective economic necessities.
But I cannot make any prognosis.”
–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com
[TOPICS: MGX$$$,MT$$$$,M$$EC$,M$$CR$,M$X$$$]
