Fed tapering necessary even if painful: ECB's Noyer

PARIS Thu Sep 12, 2013 12:19pm EDT

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

PARIS (Reuters) - The U.S. Federal Reserve's plans to rein in its unconventional monetary stimulus is necessary even if it is weighing on some emerging markets, ECB policymaker Christian Noyer said in a newspaper interview released on Thursday.

Emerging markets have suffered steep losses since the U.S. central bank indicated in May it would slow the pace of its bond purchases, hitting capital flows that have lifted such markets in recent years.

"The normalization of American monetary policy in the timeframe indicated by the Fed is necessary even if it is deflating certain over-valued emerging markets," Noyer, who is also governor of the Bank of France, told L'Opinion newspaper.

"Those (emerging economies) with big structural imbalances will have to make efforts (to reform), but for the others the situation will rebalance quite quickly," he added.

While the Fed is expected to start stepping back from its exceptional monetary stimulus possibly as soon as its next meeting, Noyer said the European Central Bank (ECB) was not about to follow in its footsteps for now, even though the region's economic outlook was improving.

"The ECB's actions are independent of the Fed and our accommodative policy is totally appropriate for the euro zone's economic situation," he said.

Turning to France, Noyer said the government of President Francois Hollande needed to tackle public spending, cut red-tape for companies and trim staffing in the public sector.

Noyer also voiced regret that the government had not sought to extend the legal retirement age as part of a reform presented this month aimed at getting the pension system's accounts back in the black.

(Reporting by Leigh Thomas; Editing by Ingrid Melander and Mark John)

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