The economic situation in the 17-nation euro area isn’t getting better and the European Central Bank has little room left to maneuver, European Central Bank Governing Council member Klaas Knot said.
“The last information we have on the economy isn’t that positive and isn’t leading to better prospects,” Knot said, speaking to reporters late yesterday in Washington where he is attending a meeting of the International Monetary Fund. “We have little ammunition left so we need to ask ourselves when is the right moment to use it,” Knot said.
With doubts growing about the ECB’s projection for an economic recovery later this year, ECB President Mario Draghi has signaled he’s looking at a range of measures, including cutting interest rates. ECB Governing Council member Jens Weidmann, who also heads Germany’s Bundesbank, said yesterday that the ECB would only lower borrowing costs to a record low if economic data worsen. The benchmark rate is currently 0.75 percent.
Knot, who is also the Dutch Central Bank President, echoed comments made by Draghi yesterday who said the euro area hasn’t improved since the ECB’s last meeting on April 4. The Frankfurt-based central bank has been closely watching data as they come in, “and so far we haven’t seen any improvement in the situation,” Draghi said.