FRANKFURT: The euro zone economy may be in better shape than earlier thought so European Central Bank interest rates may be raised higher over time than previously estimated, ECB Board Member Benoit Coeure argued on Thursday.
"If potential growth has not fallen by as much as we thought, it may imply that the neutral rate of interest - the level that determines the degree of accommodation our policies provide - might be higher than is commonly estimated," Coeure said in Paris.
"A higher than believed neutral rate would allow us to recalibrate our monetary policy as the expansion continues, while still providing the accommodative stance that is necessary for inflation to converge sustainably towards our aim." But Coeure added that current ECB policy was appropriate and said that rates would remain at their present levels for an extended period of time.
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