ECB’s Nowotny Sees Risk of Mild Recession in Euro Region
European Central Bank Governing Council member Ewald Nowotny said he sees the risk of a “mild recession” in the euro zone.
“This is a phase of insufficient growth,” Nowotny, who heads Austria’s central bank, said in Vienna today at an event marking the 10th anniversary of the introduction of euro notes and coins. “For the total euro zone in 2012 it will be zero, if we are lucky.”
The Frankfurt-based ECB has cut its benchmark rate to 1 percent, matching a record low, and flooded the banking system with cash in an effort to keep credit flowing to the 17-nation economy during the sovereign debt crisis. Policy makers next convene on Jan. 12. All but six of 53 economists in a Bloomberg News survey expect them to leave rates on hold.
The ECB on Dec. 8 cut its 2012 growth forecast to 0.3 percent from 1.3 percent.
“‘Mild recession’ is the buzzword,” Nowotny said, adding that “recessions are never all that mild -- growth of minus 1 percent is an economic problem.”
To contact the reporters on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net; Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net
To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Stephen Foxwell at sfoxwell@bloomberg.net
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