Mersch Says ECB Has Done All It Can to Fight Crisis
European Central Bank Governing Council member Yves Mersch said the bank has done everything it can to fight the financial crisis, suggesting he sees no scope to expand emergency policy measures.
“I think the ECB has done all that it could to alleviate the consequences of the financial crisis,” Mersch told reporters in Luxembourg today. “On the available information and analysis, we have done what needs to be done and consider our monetary policy stance as appropriate.”
The ECB on June 4 kept its benchmark interest rate at a record low of 1 percent. It has announced plans to lend banks as much money as they need for up to 12 months and said it will buy 60 billion euros ($83 billion) of covered bonds to counter the worst recession since World War II. The Federal Reserve and Bank of England have gone further, cutting their key rates close to zero and buying government and corporate bonds to stimulate growth.
“There is no need for additional measures at the moment,” Bundesbank President and ECB council member Axel Weber said earlier today.
Mersch indicated the ECB would only consider further action if the economy takes an unexpected turn for the worse. “If the ceiling is falling on our heads, to use a French expression, of course we would have to react,” he said.
Recession Easing
Evidence is mounting that the worst of the crisis has passed fast payday loan no faxing. The contraction in Europe’s manufacturing and service industries is easing and confidence in the economic outlook has risen to a six-month high. In Germany, Europe’s largest economy, investor sentiment increased more than economists forecast to a three-year high this month, a report showed today.
“One could see confidence levels taking up more than expected,” Mersch said. “The last figures released” in Germany “today could give signs in that direction.”
The ECB’s main scenario is that “we will have a gradual recovery and that we will start having positive growth rates again sometime in the middle of next year,” he added.
Some ECB council members are less convinced.
Athanasios Orphanides of Cyprus cautioned yesterday against reading too much into signs of economic stabilization, saying there is no evidence yet that the world is emerging from recession.
Austria’s Ewald Nowotny also warned against starting to tighten monetary and fiscal policy too soon. “We are still in a crisis,” he said yesterday. “The primary goal should be to restore economic growth as fast as possible.”
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