September 1, 2017 / 8:19 AM / a year ago

ECB's Nowotny sees little room for rate hikes if inflation low

ALPBACH, Austria (Reuters) - There is little room for a European Central Bank interest rate hike as long as inflation is low, Austrian central bank governor Ewald Nowotny said on Friday.

European Central Bank (ECB) Governing Council member and OeNB governor Ewald Nowotny addresses a news conference in Vienna, Austria, June 9, 2017. REUTERS/Leonhard Foeger

“As long as we have low rates of inflation... I do not see a perspective for higher rates of interest,” Nowotny, who also sits on the ECB’s rate-setting Governing Council, told a conference. “

“Interest rates do have an important element not only on the macroeconomic side but they also have to play an important role as signalling in a market economy,” he added.

Euro zone inflation rose to 1.5 percent in August but is expected to undershoot the ECB’s target of almost 2 percent for years to come.

The ECB has pledged to keep its key rate, now at -0.4 percent, at its current level until well past the conclusion of its asset purchases.

Reporting by Kirsti Knolle; Writing by Balazs Koranyi; Editing by Francesco Canepa

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