ECB's Noyer: Small rate cut would not help periphery - WSJ

FRANKFURT Tue Feb 19, 2013 5:15pm EST

European Central Bank (ECB) governing council member Christian Noyer listens to a speech by Bank of Japan Governor Masaaki Shirakawa (not seen) at the Paris Europlace Financial Forum in Tokyo December 3, 2012. REUTERS/Yuriko Nakao

European Central Bank (ECB) governing council member Christian Noyer listens to a speech by Bank of Japan Governor Masaaki Shirakawa (not seen) at the Paris Europlace Financial Forum in Tokyo December 3, 2012.

Credit: Reuters/Yuriko Nakao

FRANKFURT (Reuters) - The European Central Bank is more interested in ensuring that its monetary policy decisions are transmitted across the euro zone than engaging in another small rate cut, ECB Governing Council member Christian Noyer was quoted as saying on Tuesday.

"There is no particular interest in cutting rates by a few cents if it only impacts Germany or core countries," Noyer, who also heads the Bank of France, told Wall Street Journal in an interview.

The southern European countries mired in the debt crisis have not reaped full benefits of the record low interest rates, with the rates consumers and firms having to pay still clearly above the ones in core euro zone countries.

Noyer also said that the excess liquidity levels remained "very significant" even after upcoming LTRO repayments. Banks have the opportunity to pay back early 3-year loans on a weekly basis if they so wish.

They took more than 1 trillion euros in ultra-long term funds from the ECB roughly a year ago.

Commenting on the rising euro, he said that it might push inflation lower.

"It is clear that if there are changes in foreign exchange it will influence our inflation outlook," he told the newspaper.

At the same time, he said he expected that the common currency would not rise further, following the statement by 20 industrialised nations that they commit to foreign exchange rates being determined by markets.

"I think the G-20 message will help currencies to stay in line with economic fundamentals and from this point of view there is no reason for the euro to be pushed higher," Noyer said.

(Reporting by Sakari Suoninen, Eva Kuehnen and Martin Santa)

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