December 15, 2017 / 10:26 AM / in 3 months

ECB must avoid distorting market with asset buys, Nowotny says

VIENNA, Dec 15 (Reuters) - The European Central Bank must be careful to avoid distorting markets with its asset purchases and that is an important factor in deciding when to adjust stimulus, Governing Council member Ewald Nowotny said on Friday.

When asked if the central bank risked being behind the curve in reining in its stimulus given high growth and its unchanged message on Thursday, Nowotny said the question was more whether one of weighing the costs and benefits of asset-purchasing programmes, and it was important to avoid market distortions.

“That is my view the main issue, when we see for example that interest rates for bonds in the non-investment area, so of low quality, non-rated, are of the same order as the interest rates we have for government bonds, that gives me pause for thought,” Nowotny said. (Reporting by Francois Murphy; Editing by Matthew Mpoke Bigg)

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