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ECB will continue current policy until conditions improve, Vasle says

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By Reuters
ECB will continue current policy until conditions improve, Vasle says
FILE PHOTO: European Union flags flutter outside the European Central Bank (ECB) headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo   -   Copyright  Kai Pfaffenbach(Reuters)

By Marja Novak

BRDOPRIKRANJU, Slovenia (Reuters) – The European Central Bank is determined to maintain its present monetary policy until conditions improve, ECB governing council member Bostjan Vasle told a banking conference on Friday.

He said the ECB believes interest rates should remain low for a “longer period”, adding that ECB policy was aimed at influencing short-term and long-term interest rates.

“We are aware that the room for adopting further instruments is probably reducing and could lead to conditions when the effectiveness of instruments will be even smaller while their negative effects will be getting bigger,” Vasle said.

Consequently, euro zone states need to accompany ECB monetary policy with structural and fiscal reforms that will promote economic growth, raise productivity and address challenges of the ageing population, he said.

Global risks and uncertainties are rising, mainly because of trade disputes, uncertainties regarding Brexit and slowing economic growth in China, he said.

“The key factors that are slowing down growth and increasing uncertainty are coming from the economic policy-makers … and are not a result of internal imbalances,” Vasle said.

He urged banks to lend more to companies but warned that ample liquidity of banks could lead them into riskier investments that might threaten financial stability.

(Reporting by Marja Novak; Editing by Alison Williams)