ECB's Coeure Still Sees Need for Stimulus, Seeks Fiscal Reforms

(Bloomberg) -- The euro-zone economy still needs ample monetary stimulus to achieve the European Central Bank’s price stability goal, executive board member Benoit Coeure said in a newspaper interview.

The ECB has taken an “important” step to normalize monetary policy as the economy is expanding, unemployment has fallen and “price pressures are gradually picking up,” he said in a Tagesspiegel report. But the sustained improvement won’t happen overnight and support is still needed to bring inflation to the ECB’s goal of just under 2 percent, he added. 

The ECB will scale back asset purchases in October and is on course to cap its bond-buying program at the end of the year. Policy makers expect to keep interest rates at their present record low level at least through the summer of 2019.

Coeure called on member states to reform fiscal and economic policies. “Many euro-area countries still don’t have the fiscal space to support their economies in the event of a crisis, and their economies are not well prepared for long-term challenges,” he said.

A well-designed “common euro-area budget could help to dampen the impact of large economic downturns and make the economy less dependent on the ECB’s monetary policy,” he added.

Coeure shrugged off speculation about the next ECB President when Mario Draghi steps down next year. “It’s in the hands of the heads of states and governments, and that discussion has not started,” he said.

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