ECB’s Hansson Says Inflation Outlook Confirms Rate Pledge Basis

European Central Bank Governing Council member Ardo Hansson comments on the euro-area economy, non-standard measures, interest rates and inflation projections.

Hansson, who also heads Estonia’s Eesti Pank, made the remarks in an interview in Tallinn today.

On inflation projections:

“It confirms the basis for the forward guidance, which was reconfirmed and remains valid in this setting. The risks to these inflation forecasts are to both sides but they do indicate inflation being well contained and somewhat on the lower side for a while. The forecasts also show that by 2015 core inflation is actually rather back up towards historical averages. The issue is more that the non-core components, particularly energy, are going to remain fairly weak.”

On interest rates:

“The news we got after the November rate cut confirmed the decision. We didn’t see something that should have made us rethink the decision.”


“This is part of the toolbox, particularly because they have been used already. If long-term refinancing operations are unconditional, they are rather straightforward. We just have to look at the specific evolution of liquidity conditions and there’s probably a constellation of trends which would bring that measure to the fore relative to other possible instruments.”

“I’m skeptical on targeted long-term loans. Those are operationally extremely complex. Also if there’s a general concern about liquidity conditions you would think the issue whether it goes to particular sectors or not is somewhat secondary.”

“Operationally, conditional LTROs are tremendously complicated. Each national central bank would in fact have to apply this and trying to measure what’s additional and conditional in which way. Maybe it’s surmountable but compared to a traditional liquidity operation, which is rather straightforward this would introduce quite a lot of complexity.”

On the economy:

What we see is that our forecasts are being confirmed. The trajectory of bottoming out in the middle of 2013, followed by some slightly positive growth rates, then rising up to a level which is above 1 percent annually, that’s all being confirmed. This confirmation of a weak, but still noticeable recovery is something we are seeing at the moment. Slow, positive growth seems to be continuing at the moment, we’re not expecting any big surprises here.’’

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