HONG KONG (MNI) – The recent rate hike by the European Central Bank
is a step toward policy normalization after the financial crisis and
ensuing debt problems in Europe, ECB Executive Board member Juergen
Stark said Tuesday.
“We are still of view this change in the stance was necessary
because the official interest rate was no longer appropriate; the
interest rate was decided on at peak of crisis but the economic
situation and the situation in financial markets has changed since
then,” he said.
“We see the increase as a step toward normalisation but please
don’t ask me what the new normal is going to be,” he said at a
discussion hosted by Institute of Regulation and Risk North Asia.
Stark said said the euro zone’s recovery has strengthened but
remains uneven across the region. Even so, the ECB must make policy for
the entire area, and not just individual regions.
“We cannot tailor our interest rates to the needs of a region,
there are always differences in growth and inflation rates, you have to
make a decision based on the area you are in charge of as a whole,” he
said.
He said eurozone inflation is expected to be above 2% this year,
declining slightly next year.
[TOPICS: MT$$$$,M$X$$$,M$$EC$,MGX$$$]