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There are growing calls in Germany to bring the ECB's 2.3
trillion euro ($2.5 trillion) bond-buying program to an end as
inflation there rebounds, far outpacing price growth in weaker
economies such as Italy, where anti-euro sentiment is swelling.
Nowotny said that rate setters are likely to wait for the ECB's
June economic forecasts before reassessing their policy stance
and even then no decision is likely to be made about "tapering",
or gradually ending, the program aimed at boosting inflation in
the euro zone.
"The discussion about our overall economic assessment will
probably (take place) in June," Nowotny, the Austrian central
bank governor, said. "But this is not a tapering discussion."
Nowotny added that any increase to the ECB's interest rates,
currently in negative territory, would only come after the start
of "tapering", citing the policy adopted by the U.S. Federal
Reserve.
"One would start with tapering first, so a reduction of the
liquidity measures, and only at a later stage it would be
sensible to take action on the interest rate policy," he said.
ITALY AND FRANCE
Nowotny ruled out the prospect of Italy or France, where
euroskeptic parties are polling strongly, leaving the euro zone.
"That's an absurd discussion," he said. "It would be economic
suicide for Italy to leave the euro zone. The same is true for
France."
French far-right party leader Marine Le Pen, who is leading the
race for the first round of May's presidential elections, and
Italian comedian Beppe Grillo, whose Five-Star Movement is neck
and neck with the pro-euro Democratic Party in the polls, have
both called for their countries to go back to national
currencies.
ECB President Mario Draghi said earlier this month any country
leaving the currency bloc would need to settle its debt with the
ECB first. This amounts to some 358 billion euros in Italy's
case.
Nowotny dismissed the debate outright, however, and suggested
Draghi too should not have bothered commenting on it.
"I would almost say, honestly, even the statement of President
Draghi on this topic seems to me to take the discussion almost
too seriously," Nowotny said.
(Writing By Francesco Canepa and Andreas Framke in Frankfurt;
Editing by Hugh Lawson)
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