ECB's Praet: ECB could adopt rate guidance if economy slows sharply
|The ECB's chief economist Peter Praet recently crossed the wires saying that the ECB could adopt rate guidance if the economy were to slow sharply.
Key quotes (via Reuters)
- What counts for us is medium-term and we see positive and negative factors there.
- A rebound is likely, but it is too early to say by how much.
- Biggest problem by far is political uncertainties persisting for so long, related to protectionism, Brexit.
- Question is how financial sector would react; there's risk banks could act even more pro-cyclically than usual.
- TLTROs have been a very useful tool to deal with impairments in transmission of monetary policy, are part of toolbox.
- We do need to monitor the transmission of monetary policy through banking system carefully.
- If euro area economy were to slow more sharply, we could adapt guidance on rates, complemented by other measures.
- Further asset purchases may not be needed at all to ensure that financing conditions are appropriate.
- It may make sense for ECB to review overall mon pol framework in future, now may not be right time.
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