Whoops! I don’t think he was meant to say that.
Ewald Nowotny, Austria’s central bank governor, has told journalists that he did not expect the ECB to lift its main policy rate in the next six months. That is not the ECB governing council’s official line, as set out earlier this month by Jean-Claude Trichet, president, according to which the euro’s monetary guardian could act at any time to keep inflation under control. Mr Trichet sent the euro sharply higher after highlighting price risks faced by the eurozone.
“I expect no decision on [interest] rate hikes in the first half of the year,” Mr Nowotny said at a conference in the UK, Reuters reports.
Ewald Nowotny, Austria’s central bank governor, appears to have gone slightly off-message in an interview with WirtschaftsWoche, the German business magazine. The European Central Bank was seeking to correct “inefficiencies” and “imbalances” in bond markets with the purchase programme it launched at the height of the eurozone crisis in May. “As long as there are these inefficiencies, we will correct them,” he said.
That gave the impression the ECB was somehow trying to control the market. The official line is that the bond purchases are meant, simply, to restore the monetary policy “transmission mechanism”.
Still, I am not sure Mr Nowotny was really suggesting the programme had been scaled-up to bring down, say, Irish bond spreads. Indeed, he emphasised that the ECB had spent only about €60bn under the programme since May, which was “not a lot”.