ECB's Nowotny sees reasons for more expansive policy

VIENNA (Reuters) - European Central Bank Governing Council member Ewald Nowotny said on Sunday that falling inflation and a slowdown in growth were reasons for the ECB to think about a more expansive monetary policy.

Nowotny quoted ECB President Jean-Claude Trichet, who said earlier this week the ECB had discussed cutting rates at its policy meeting on Thursday before deciding unanimously that no change of the rate -- at 4.25 percent -- was needed this month.

"The rate of inflation is still above the ECB's target rate, but it clearly has a declining tendency, and unfortunately we also see the tendency that economic growth is slowing down significantly," Nowotny said in a television talk show on Austrian state TV broadcaster ORF.

"Those are certainly all aspects which lead you to think about the options you have, and to think about when monetary policy should switch towards a more expansive direction again," he said in the talk show.

"There is no doubt that the focus is now on reviving economic growth," he added.

Ewald Nowotny also said in the discussion that a too expansive U.S. monetary policy in the past was partly responsible for the current financial crisis.

"One of the lessons you have to draw as a central bank is certainly that one of the reasons (for the current financial crisis) is the U.S. Federal Reserve ... was too expansive for a much too long period," Nowotny said.

"So one of the lessons for central banks is: Money needs to be scarce," he said.

Austrian Finance Minister Wilhelm Molterer said in the same discussion that Europe should push for introducing a tax on financial transactions -- also known as "Tobin tax" after the economist who first proposed it.