Nowotny Says ECB Should Normalize Policy Sooner Than Planned

(Bloomberg) -- The European Central Bank should consider tightening its monetary policy sooner than originally planned, ECB Governing Council member Ewald Nowotny said Sunday on Austrian television.

Nowotny, the current governor of Austria’s central bank Oesterreichische Nationalbank, explained that the ECB is still enforcing a “crisis mode” monetary policy when Europe is currently in a very good economic situation. The normalization should come a bit quicker than currently planned, he added.

“We have fixed the interest rates for another entire year, and I think that’s something we should have a look at and ask if it’s really sensible given the economic circumstances,” Nowotny told ORF television during the interview. The majority in the ECB governing council believes the central bank should wait until the inflation rate comes closer to 2 percent, although “I’m more optimistic, and I’m not totally alone” with that view, he said, adding “there’s still an open debate,” without specifying the timing he favors.

Regarding Italy, the Austrian bank governor said that both the markets and the ECB are watching the country. There are “very different messages” from the Italian government, Nowotny said. The finance minister is sounding responsible, “others less so,” and “we don’t know how it will play out in the end,” he told ORF.

To contact the reporter on this story: Michael Msika in London at mmsika4@bloomberg.net

To contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Christopher Elser, Jon Menon

©2018 Bloomberg L.P.