ECB’s Nowotny Warns of Stagnation Risk

The biggest problem facing the euro zone is a long period of stagnation, a member of the European Central Bank’s governing council said Tuesday.

“If you fear something you should fear the right thing. It’s not inflation, it is stagnation that is the real danger,” said Ewald Nowotny, who is also the governor of Austria’s central bank.

Mr. Nowotny’s comments come after the ECB last week cut its benchmark interest rate to a record low, a move that was criticized by some countries, such as Germany.

The rate cut needs to be seen in the larger economic context, Mr. Nowotny said, as it will help to increase real incomes especially for low-income earners.

Central banks have been “pushing conventional instruments up to the limit” in fighting the debt and financial crisis, Mr. Nowotny said at a conference in Vienna.

via MarketWatch

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.