There is no "urgent" need for the European Central Bank to act
against slowing inflation, a member of the central bank's governing
council said in an interview published Wednesday.
The ECB next meets May 8, and most economists expect no policy
moves from the bank at this meeting, but are looking to June when
the bank issues new forecasts on growth and inflation.
At this point, Ewald Nowotny said, the bank will be able to best
judge how inflation is developing. "Therefore I believe that we
shouldn't take any measures until then," he tells the Austrian
daily Der Standard.
The bank's most recent forecasts, issued in March, project
inflation rates of 1% this year, 1.3% in 2015 and 1.5% in 2016.
Annual inflation was 0.5% last month, more than a four-year low.
The ECB targets inflation of just below 2% over the medium
term.
Some economists and analysts fear the euro zone is entering a
prolonged period of low inflation that could hamper the economy and
result in price declines--known as deflation.
Mr. Nowotny said he doesn't see a risk of this at present, and
expects the strong euro exchange rate to "self-correct."
As monetary policy in the U.S. becomes more restrictive, he
said, the country will attract capital flows, strengthening the
dollar.
Mr. Nowotny also ruled out the ECB intervening in currency
markets in a similar manner to the Swiss Central Bank--which set a
ceiling for the franc-euro exchange rate in 2011 to head off the
threat of deflation and support exporters suffering from the
strength of its currency.
Mr. Nowotny, who is also the central bank governor of Austria,
said the Alpine country's economy could grow by as much as 2% in
2015.
Newspaper website: http://derstandard.at
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