The European Central Bank's chief economist stood by the ECB's pledge to keep its policy easy after comments by other rate-setters raised questions about the bank's next moves. In a newspaper interview published on Friday, Peter Praet also took on euro-hostile movements in Italy, saying they were misleading people and hiding the fact that reverting to the old currency would involve huge costs for the population at large.
The ECB has said it would continue buying bonds until at least the end of the year and keep interest rates at current record lows or even cut them until "well past" that point. "Our forward guidance has served us well and led to financial conditions that are appropriate," Peter Praet told Il Sole 24 Ore. "We reiterated it ... in the Governing Council."
Austrian governor Ewald Nowotny said the ECB would decide at a later time whether to raise rates before or after its bond-buying programme comes to an end. His Italian peer Ignazio Visco said the time between the end of the purchases and the first rate hike could be shortened.
"We do not give a date for when that will be," Praet said. "The Governing Council will decide in due course how long that 'well past' will be." Praet also emphasised slow wage growth and said the ECB would have to be "patient". "Wage evolutions...may reveal that there is more slack in the euro area labour markets than unemployment rates show," Praet said. "We have to be patient."
Published under arrangements with Reuters.
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