European Central Bank Governing Council member Ewald Nowotny said he doesn’t expect the ECB to buy bonds in 2013.
Asked if he sees a risk that the ECB will have to activate its bond-purchase program this year, Nowotny told reporters in Riga: “No, I do not see this perspective.” Markets are normalizing “so I do not see a need for specific additional activities in the foreseeable time,” he said.
The ECB’s bond-purchase program, dubbed Outright Monetary Transactions, has restored calm in financial markets by removing the risk of a euro breakup. Bond yields of debt-strapped nations have declined since the plan was announced in August, even though no governments have requested assistance and signed up to the conditions necessary for the ECB to consider intervening.
The outlook hasn’t changed much since the ECB predicted in December that the 17-nation euro economy will shrink 0.3 percent this year, Nowotny said. The euro, which has appreciated more than 8 percent against the dollar since late July, won’t put an extra burden on the recovery, he added.
“We are in a corridor that has also been achieved in the past, so I don’t see a specific danger that it might have negative effects on growth,” Nowotny said. “The number we have right now is not something that is out of line in our long-term experience.”
The euro dropped today and traded at $1.3182 at 3:45 p.m. in Frankfurt.
To contact the reporters on this story: Aaron Eglitis in Riga at email@example.com; Jana Randow in Frankfurt at firstname.lastname@example.org
To contact the editor responsible for this story: Craig Stirling at email@example.com