Nowotny Says Latest ECB Move Was ‘Correct Response’ to Slowdown

(Bloomberg) -- European Central Bank Governing Council member Ewald Nowotny said policy makers made the right decision to expand monetary stimulus in response to the latest economic slowdown.

The ECB wanted to stress “that we clearly are not in a recession,” Nowotny told reporters in Prague on Friday. “On the other hand we wanted to give an expansionary signal. I think what the ECB did was a correct reaction.”

The ECB unveiled deep cuts to its economic projections on Thursday, promised to keep interest rates low for longer and offered banks new long-term loans. Details of the lending plan still have to be agreed, and President Mario Draghi said an announcement will be made in due course.

“To make this a successful program, it has to be well-prepared,” Nowotny said in response to a question about the intended start date in September. “I think the timing is a correct one.”

To contact the reporter on this story: Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Jana Randow

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