ECB's Praet reiterates rates to remain at current lows, criticises anti-establishment parties
The European Central Bank will keep interest rates low well past the end of its bond purchase programme, its top policy thinker reiterated, while criticising anti-establishment parties' claims about the benefits of exiting the euro.
Speaking to Italian daily Il Sole, Peter Praet reiterated the ECB Governing Council's pledge that policy rates would remain at current record lows - or even be cut further - until "well past" the date when its quantitative easing programme ground to a halt.
The exact meaning and length of "well past" would be decided by the Governing Council in "due course", he said.
He argued for patience pointing to slow wage growth as his main argument.
"Wage evolutions...may reveal that there is more slack in the euro area labor markets than unemployment rates show,"
Praet also emphasised how the ECB's forward guidance had served it well, leading to appropriate financial conditions.
"We reiterated it [...] in the Governing Council."
His remarks may have been prompted by those from some of his peers over the past week, with Austrian central bank chief Ewald Nowotny going on record on 17 March saying the ECB had yet to decide whether to raise rates before or after the end of its QE programme.
As regards the current economic and social debate in Italy, he described talk from anti-establishment parties about exiting the euro as both nostalgic and misleading.
The 5-Star anti-establishment movement had called in a White Paper for legal measures to be put in place for countries wanting to come out of the single currency area or should one wish to join the European Union but not the euro bloc.
"The cost of changing the monetary regime will be huge and the low-income part of the population will suffer the highest cost."