BERLIN (Reuters) - The euro zone economy is not yet ready for a swift end to the European Central Bank’s loose monetary policy, Executive Board member Joerg Asmussen said in a newspaper interview on Wednesday.
Abandoning its tradition of never pre-committing on future moves, the ECB said in July it would keep its interest rates at current or lower levels for an “extended period” - its first use of forward guidance.
“A quick change in monetary policy would definitely come much too soon for the euro zone economy,” Asmussen told financial daily Boersen Zeitung according to an advance copy of an interview due to be published on Thursday.
He also played down any prospect of further immediate ECB action, such as measures to counter rising money market rates.
“We will continue to monitor that - we haven’t said more than that,” he said.
ECB Governing Council member Ardo Hansson said on Wednesday that offering more long-term loans to banks is on the table as a tool for the ECB to steer down market rates and help boost the euro zone economy, but he told Reuters the bank’s current policies were sufficient for the moment.
On the ECB’s OMT bond-buying plan, which it could activate for countries that have access to capital markets and are under an aid program, Asmussen suggested the central bank could use the measure to help a country return to bond markets.
Asked whether the OMT could be used to help countries regaining market access, Asmussen said:
“That will be evaluated case by case by the ECB Governing Council on the basis of questions like: does the country have an issuance calendar? What volumes are being issued? Can it show a full yield curve? Then a decision will be made.”
Asmussen called on France to do more to boost its competitiveness, saying the government needed to pick up the pace on reforms and that planned changes to the pension system were a step in the right direction but “do not go far enough”.
France cut its forecast for growth next year to 0.9 percent on Wednesday and said its public deficit would fall more slowly than previously expected as a result.
Asked what the ECB, which has purchased Greek government bonds, would do if Greece did not manage to return to the capital market in 2014, Asmussen said: “At the ECB, we in any case expect that the bonds we have purchased as part of the SMP (Securities Markets Programme) will be fully serviced.”
Reporting by Michelle Martin; Editing by Ruth Pitchford