September 15, 2017 / 12:06 AM / 10 months ago

ECB must be cautious in exiting extraordinary monetary policy - Schaeuble

BERLIN (Reuters) - German Finance Minister Wolfgang Schaeuble said in a newspaper interview that the European Central Bank needed to be very cautious when ending its ultra-loose monetary policy to prevent a nervous reaction from financial markets.

FILE PHOTO - German Finance Minister Wolfgang Schaeuble presents draft budget for 2018 and mid-term plans for state spending until 2021 during a news conference in Berlin, Germany, March 15, 2017. REUTERS/Fabrizio Bensch/File Photo

After buying more than 2 trillion euros (1.78 trillion pounds) worth of bonds since 2015, the ECB is expected to announce next month it will slow the pace of its purchases, since economic growth is accelerating and inflation is stable, albeit sluggish.

“The exit from extraordinary monetary policy needs to be approached very cautiously so that financial markets do not react over-nervously,” Schaeuble said in an interview with Passauer Neue Presse newspaper.

“That’s why this needs to be communicated properly. Central bankers can do that better than politicians,” said Schaeuble, who belongs to Chancellor Angela Merkel’s conservatives - the party expected to win a Sept. 24 election.

Regarding the ECB’s October meeting, Schaeuble said: “We should have confidence that the ECB will live up to its responsibility.”

Schaeuble said the euro zone economy was faring far better than many sceptical observers had thought would be possible several years ago.

“In all countries - including Greece - the economy is growing. Disparities in competitiveness are being reduced,” he said.

“The extraordinary monetary policy with low interest rates and bond-buying was necessary to overcome the economic crisis,” he added.

Reporting by Michelle Martin; Editing by Toby Chopra

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