Tuesday, 2 February 2016

ECB’s Nowotny hopes markets won’t over-anticipate in March

In World Economy News 02/02/2016

European Central Bank policymaker Ewald Nowotny on Monday said he hoped markets would not overly anticipate ECB actions in March after showing excessive expectations for policy action in December.
“We have seen in December a situation where market expectations became much too extensive, so I hope that there is a more rational approach this time,” he told reporters on the sidelines of a central banking conference.
“In December, they (markets) clearly expected too much and I think that should give them a certain lesson,” Nowotny said.
Asked whether there would be value in cutting any rates other than the ECB’s main deposit rate, such as the refinancing rate, he said it was “much too early” to have any discussion about that.
“There is now work going on in a number of working groups and commissions and it would be premature to give details,” he added.
Nowotny said inflation might disappear for a few months but ruled out deflation for the full year ahead.
“There might be negative inflation rate in some months – I do not foresee this for the whole year and especially not for the second half,” he said.
Nowotny added that energy price falls have some second-round effects, such as in transportation costs, but that was not a major impact and that core inflation “has proven to be relatively stable.”
Source: Reuters (Reporting by Gergely Szakacs and Marton Dunai; Editing by Jermey Gaunt)