LONDON (Reuters) – The European Central Bank’s policy arsenal has not been depleted and fiscal policy could help stimulate investment, said the European Central Bank’s incoming Executive Board member Philip Lane on Tuesday.
Investors fear the ECB’s window to potentially raise interest rates has closed, meaning it has little in its toolkit to face the next recession.
But in some of his first public remarks since securing the job of replacing current ECB chief economist Peter Praet, Lane, Ireland’s central bank governor, said the bank still had options.
“The idea that the ECB lacks potency is very far from where we are,” he told academics and diplomats at Ireland’s embassy in London.
He added that fiscal policy could also help reduce policy uncertainty, and encourage the private sector to resume investing.
(Reporting by Tom Finn; Editing by Marc Jones)