Europe mustn't let interest rates decouple from wider world -Nowotny
VIENNA Oct 18 (Reuters) - European Central Bank Governing Council member Ewald Nowotny warned on Friday that euro zone interest rates must not become decoupled from those elsewhere because of the risk that a higher euro would choke off growth.
"A unilateral rise of interest rates would lead to an even sharper rise in the euro exchange rate, which would hold back economic growth and which could even lead to the danger of deflation," he told a retail investor conference in Vienna.
But falling inflation rates mean price stability in the euro zone - the ECB's main focus - is not at risk, he added.
"If we would see the danger that this is in danger, we would surely react fully. At this point we see no danger to price stability," Nowotny said. "On the contrary, inflation rates are declining rather strongly at the moment." (Reporting by Michael Shields; Editing by Catherine Evans)
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