ECB stands ready to act if economy slows more sharply, Praet says
By Alexander Bueso
Date: Tuesday 19 Feb 2019
(Sharecast News) - A top European Central Bank official signaled overnight that further easing was clearly possible should the euro area economy slow more sharply.
However, he went on to say that whether or not the Governing Council would open the door to such a move as soon as at its next meeting, on 7 March, was not yet clear "at this stage".
In remarks to Boersen Zeitung, ECB chief economist, Peter Praet, said: "If the euro-area economy were to slow more sharply, we could adapt our forward guidance on interest rates and this could be complemented by other measures."
More forcefully yet, he added: "But one thing is clear: the ECB's Governing Council will always find ways and means of acting if it needs to."
On the other hand, policy decisions and signals, such as through the central bank's forward guidance, were calibrated with the medium-term outlook in mind.
Hence, Praet said that at this stage he could not yet say if the GC would tweak its forward guidance when it next met, although he did indicate that policymakers would analyse both the current and the expected state of the so-called 'transmission mechanism' for the ECB's monetary policy.
According to the economist, the key drag on growth was from global concerns around protectionism and from Brexit.
Praet also urged governments to put paid to such uncertainties "in a positive way", explaining that the longer that they lingered, then the greater that the economic cost would be.
When queried on the magnitude of the expected rebound in Eurozone growth from its current soft patch, he said it was too early to ascertain, although he believed that faster growth was likely.
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