HELSINKI/TALINN/VIENNA (Reuters) - Three European Central Bank policymakers reaffirmed plans to dial back monetary stimulus on Wednesday, brushing off data showing the euro zone economy is slowing more than expected.
Estonia’s Ardo Hansson, Finland’s Olli Rehn and Austria’s Ewald Nowotny all said this week’s disappointing preliminary figures for economic output in the euro zone would not derail the ECB’s tightening plans as inflation was still on the up.
The ECB has said it will halt its 2.6 trillion euro ($2.95 trillion) bond-buying programme at the end of the year and could raise interest rates for the first time since 2011 sometime after next summer.
“I think we would need very material change in the outlook to somehow fundamentally change the policy outlook,” Hansson, Estonia’s central bank governor, told a news conference in Tallinn.
“If we are broadly on track, plus-minus a little bit, then I don’t think it causes for adjustment in neither direction.”
Austria’s central bank governor Nowotny, who like Hansson is regarded as a policy hawk, also saw no need to change tack as some of the economic slowdown was due to temporary factors, affecting for example German car-makers.
The euro zone economy is estimated to have grown by just 0.2 percent quarter-on-quarter in the three months to September, as the public mood turned darker and signs of distress emerged in Italy, where government plans to expand the country’s deficit have upset investors.
But inflation in the bloc came in at 2.2 percent in October, exceeding the ECB’s target for a fifth straight month thanks to higher food and energy prices.
“After a decade of exceptional measures, prospects for returning to a more conventional interest rate environment and a more normal Eurosystem balance sheet have slowly strengthened,” Rehn, the Finnish central bank governor, told a conference in Helsinki.
The Finnish governor noted core inflation remained still just above 1 percent, however, reflecting weak domestic price pressures.
Reporting By Anne Kauranen, Tarmo Virki, Francois Murphy and Alexandra Schwarz-Goerlich; Writing by Francesco Canepa in Frankfurt; Editing by Balazs Koranyi and Mark Heinrich