Europe Economy

ECB's Weber Says Current Rate Levels Appropriate


European Central Bank Governing Council member Axel Weber said current interest rate levels are appropriate, signaling that the central bank will stick to low rates for some time, the Nikkei newspaper reported on Sunday.

Flags of member states of the European Union.
Armando Franca

While there is no risk now of inflation accelerating, the outlook or European economies is patchy with the pace of recovery differing from country to country, Weber told the Nikkei in an interview.

Weber, who is also president of Germany's Bundesbank, added that the ECB's unwinding of special fund-supply programmes introduced during the global financial crisis did not signal a shift in policy rates.

His remarks echo those of ECB President Jean-Claude Trichet, who has said the unwinding of unconventional measures carried no message for interest rates.

The ECB took a small step toward unwinding its extraordinary support for the euro zone economy earlier this month, but left much of its cash buffer for banks in place as it forecast a fragile recovery.

Economists said they expected the ECB would keep up its gradual exit strategy with no rise in interest rates, now at 1.0 percent, seen until late this year or even into 2011.

Many of the world's major central banks have been steadily reining in their extra support for the economy, and the ECB's withdrawal of the banking liquidity steps is seen as a precursor to eventual rises in interest rates.

On Greece's debt woes, Weber said the cost of funding for the country will likely fall as financial markets welcome its fiscal reconstruction plan.