LONDON: The European Central Bank’s (ECB) newest stimulus package has had an impact on markets and there is no urgency to take additional steps, according to governing council member Ewald Nowotny.
“I do not see a need for further action in the near future, at least not in the field of monetary policy,” Nowotny said on Thursday.
“One should be quite aware of the fact that monetary policy has its limits.”
The central bank’s historic measures last month included a negative deposit rate and targeted long-term loans to banks to fight the threat of deflation in the 18-nation euro area.
While ECB president Mario Draghi has said policymakers are willing to use more radical measures such as broad-based asset purchases if needed, Nowotny’s comments signal that agreement on any action shouldn’t be taken for granted.
“We do see some positive results — that refer to both a certain easing of financing conditions on the European level and to the tendency of being able to have stopped the appreciation of the euro,” he said.
“Let’s wait and see how this is developing. I’m strictly against this attitude that the ECB should show a new trick at every meeting.”
Since the stimulus was announced on June 5, bond yields have tumbled and overnight interbank borrowing costs have fallen close to zero.
The euro rose on Thursday’s comments and traded at US$1.3621 (RM4.33) at 10.24am in Frankfurt yesterday. The single currency has fluctuated around US$1.36 since June, after climbing as high as US$1.3993 in May, and Nowotny signaled that he’s comfortable with the current level.
“We’ve reached a certain stabilisation,” he said. The exchange rate is not a policy target in itself and direct intervention in the market is “definitely not part of our policy instruments”, he said.
Nowotny, 70, is one of the longest-serving of the 24 members of the ECB’s governing council and is in his second term as the head of Austria’s central bank, a position he has held since 2008. Bloomberg
