UPDATE: ECB Weber: No Further Measures Needed For Now -Report
FRANKFURT -(Dow Jones)- European Central Bank governing council member Axel Weber said it is unlikely the central bank will need to take further action to cope with the financial crisis, in an interview published Monday.
"Unless circumstances worsen considerably, previous measures are adequate, in my view," Weber told the Financial Times Deutschland.
At present, the ECB needs time to assess the effects of measures already taken. Given the lag between policy and the real economy there is "more in the pipeline" from previous measures, he added.
"We would come to reassess our strategy only in the case of a dysfunctional banking system," Weber added.
The ECB wouldn't want to circumventthe financial system by expanding its credit easing program, he said: "We have always said, we want monetary policy to work through the banking system."
On the same note, Weber said, however, that he expects further write-downs and defaulting lenders.
Commenting on the German banking system, he said the picture is mixed. While he doesn't see a broad credit crunch, banks clearly aren't strong enough to take big risks.
He also warned against exaggerated economic optimism that the crisis is coming to an end. The crisis affects people through job losses, and claiming recovery too early could have "enormously negative affects on credibility," Weber said.
The German economy's "growth potential rate has likely dropped" to around 1% from around 1.6% annually, Weber said.
At a policy briefing on May 7, ECB President Jean-Claude Trichet said the council lowered the main refinancing minimum bid rate to 1%, but did not decide that this is a floor for the rate.
Web site: http://www.ftd.de -By Frankfurt Bureau, Dow Jones Newswires, +4969 2972 5514, roman.kessler@dowjones.com
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Publié le 18 Mai 2009 Copyright © 2009 Dowjones
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