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ECB's Nowotny predicts historically low interest rates in long term

ECB's Nowotny predicts historically low interest rates in long term
FILE PHOTO: European Central Bank (ECB) Governing Council member and OeNB Governor Ewald Nowotny addresses a news conference in Vienna, Austria March 28, 2019. REUTERS/Leonhard Foeger -
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LEONHARD FOEGER(Reuters)
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ZURICH (Reuters) – European Central Bank policymaker Ewald Nowotny said on Saturday he expects interest rates to be lower in the long term than they have been historically.

“In the long term, we should strive to have a normalisation,” Nowotny said in an interview on Austrian radio.

“We will likely have an interest rate level that is somewhat higher than it is today, but still lower than we have grown accustomed to from earlier times,” he told the ORF1 “Midday Journal”.

Earlier in the week, ECB President Mario Draghi signalled another round of monetary easing, as the economic outlook dims. Staff at the central bank are being asked to prepare options, opening the door to a possible rate cut and more bond buys by September.

Nowotny, who is retiring as Austria’s central bank governor and will be replaced later this year by Robert Holzmann, also said that Brexit would hurt the UK more than it would the rest of Europe.

“The main negative effects will be felt by Great Britain,” he said, adding that Austria would have “hardly any effects” from Brexit while the damage on the rest of the EU would be “relatively minimal”.

(Reporting by John Miller; Editing by Clelia Oziel)

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