European Central Bank Governing Council member Ewald Nowotny said it’s not the right time to reduce borrowing costs.
“It isn’t the appropriate time to take interest-rate action,” Nowotny, who heads Austria’s central bank, said in Vienna today. “We’re working on the assumption that growth signs will improve over the course of the year.”
While officials discussed cutting borrowing costs last week, the “prevailing consensus” was to leave the benchmark rate unchanged at a record low of 0.75 percent, ECB President Mario Draghi said on March 7. He expects the euro-area economy to “gradually recover” later this year.
“We have an unsatisfactory growth in Europe,” Nowotny said today, adding that the Frankfurt-based ECB is “observing the situation.”
The ECB last week cut its growth forecasts and now expects the 17-nation economy to shrink 0.5 percent this year before growing 1 percent in 2014. It sees inflation slowing to 1.3 percent next year, well below its 2 percent limit.
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