FRANKFURT (Reuters) - The European Central Bank is expected to emphasise after its policy meeting on Thursday that interest rates are on hold for an extended period, with signs of a tentative euro zone recovery easing pressure for fresh action.
Following are highlights of ECB policymakers’ comments since the last rate-setting meeting on July 4.
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”We expect that our monetary policy will support the recovery, which we expect to begin in the second half of the year.
PETER PRAET (EXECUTIVE BOARD), July 23
”Our base interest rates could be lowered further, as clarified by our forward guidance message. ... Furthermore, as a non-standard measure, we continue with offering banks unlimited liquidity.
”Our monetary policy is expansionary and will stay like this as long as needed, I think we have made this clear.
”Overly long phases of low interest rates carry risks, that is undisputed. It can lead to a misallocation of capital.
“The timeframe (for forward guidance) is in our view linked to the inflation trend remaining restrained.”
”As long as this trend continues, the key rates will remain at current levels or be cut further.
“Advanced economies, Europe in particular, face a long period of slow growth.”
”Europe is behind the U.S. in economic recovery and inflation risks, which implies that monetary policy has to stay accommodative for a longer period of time.
”It (forward guidance) is not an absolute advanced commitment of the interest rate path.
The euro zone is ”engulfed in a severe crisis.
Asked what an extended period meant, Asmussen said: “(ECB President) Mario Draghi said in his press conference it is not six months, it’s not 12, it goes beyond.”
“I‘m not ruling out anything,” he said when asked about another interest rate cut, but added: “”We are now driving exactly at the right speed. We would not have a foot on the brake and also not on the accelerator.
“We’ll have to see what the market reaction has been, is and will be to this statement,” he said, referring to forward guidance.
“The exit from our monetary policy stance being accommodative is distant.”
“It is difficult to disagree with the BIS (Bank for International Settlements) assessment of risks of too low interest rates for a long period of time.”
”The situation as far as price stability is concerned and the economic situation in large parts of the world is concerned, higher interest rates would not be warranted at this point in time.
”For the ECB the most important criterion is the question of inflation rates.
“If the short term risks scenarios were to materialise, they might push the full recovery back by some quarters.”
”A more worrisome possibility, however, is that of a persistent slowdown. Action is necessary to ensure that it does not materialise.
“When there are changes they will be taken into account. Everything depends on the development of the economy,” he said, referring to the pledge to keep interest rates low.
Compiled by Frankfurt Newsroom; Editing by John Stonestreet