Central Bank (ECB) refuses to extremely low interest rates once the economy starts growing. Until that point, the basic interest rate to remain at the same level - 1 per cent per annum.
Members of the Governing Board of the European Central Bank Juergen Stark announced plans for the ECB in relation to the base interest rate. According to Stark, shortly Centrobank unlikely to soften or tighten its policy, so long as the key rate will remain at 1 percent a year.
"Maintaining price stability remains the only goal to which we are guided in making decisions. This implies that we abandon the current very soft monetary policy once the economy resumes growth and bypassed the risks of inflation", - said Stark, speaking to the Organization of Austrian industrialists. In his view, the current base rate meets the requirements of the moment, even with the further deterioration of the situation on the labor market.
Save the base interest rate at the current, record-low level of the ECB decided on 4 June. Stark strongly opposed to its further decline. Until recently, he even offered to raise it as soon as circumstances permit. Strategy Stark partly contrary to the recommendations of the International Monetary Fund (IMF). On Monday, representatives of the IMF said in Washington that the ECB should consider the possibility of further reducing the rate if it receives a corresponding signal from the economy.
However, while the IMF hopes that this signal is not available. Fund experts predict that the fall of the world economy will slow in 2009, and in the first half of 2010 has been a prerequisite to recovery. Although, as the IMF, this does not mean that recovery will be rapid.
ECB experts give similar predictions. The resumption of growth in European economies are expected by mid-2010. At the same time, inflation next year, is believed the European Central Bank, will be much lower than projected just under two per cent per annum, which will continue to restrict the ability of the ECB to raise the base interest rates.
Members of the Governing Board of the European Central Bank Juergen Stark announced plans for the ECB in relation to the base interest rate. According to Stark, shortly Centrobank unlikely to soften or tighten its policy, so long as the key rate will remain at 1 percent a year.
"Maintaining price stability remains the only goal to which we are guided in making decisions. This implies that we abandon the current very soft monetary policy once the economy resumes growth and bypassed the risks of inflation", - said Stark, speaking to the Organization of Austrian industrialists. In his view, the current base rate meets the requirements of the moment, even with the further deterioration of the situation on the labor market.
Save the base interest rate at the current, record-low level of the ECB decided on 4 June. Stark strongly opposed to its further decline. Until recently, he even offered to raise it as soon as circumstances permit. Strategy Stark partly contrary to the recommendations of the International Monetary Fund (IMF). On Monday, representatives of the IMF said in Washington that the ECB should consider the possibility of further reducing the rate if it receives a corresponding signal from the economy.
However, while the IMF hopes that this signal is not available. Fund experts predict that the fall of the world economy will slow in 2009, and in the first half of 2010 has been a prerequisite to recovery. Although, as the IMF, this does not mean that recovery will be rapid.
ECB experts give similar predictions. The resumption of growth in European economies are expected by mid-2010. At the same time, inflation next year, is believed the European Central Bank, will be much lower than projected just under two per cent per annum, which will continue to restrict the ability of the ECB to raise the base interest rates.
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