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ECB's Nowotny urges caution on bond buying: newspaper
[VIENNA] The European Central Bank is right to consider stepping up its bond buying to boost inflation but should think very carefully before doing so, Governing Council member Ewald Nowotny said in a newspaper interview published on Monday.
The ECB last month raised the prospect of further monetary easing in December and said it would look at measures including modifying the asset buying programme, known as quantitative easing (QE), and cutting its deposit rate.
In an interview published on Saturday, its president Mario Draghi said the central bank was ready to do what it took to keep its inflation target on course.
Nowotny, asked why the ECB was considering expanding its bond buying, told Austria's Kleine Zeitung newspaper on Monday the bank's 2 per cent inflation goal was clearly being missed.
But he added: "There are no decisions. There are discussions. I would advise more towards caution and a steady-hand policy." Nowotny dismissed suggestions that quantitative easing had flopped. "We would be in significantly more difficulties without this programme. It has kept the euro zone from slipping more deeply into deflation and thus an economic crisis," he said.
Euro zone countries needed to support this effort with expansive fiscal policies and structural reforms, he added.