June 22, 2014 / 9:16 AM / in 3 years

UPDATE 1-ECB likely to keep rates low until 2016-Nowotny in paper

2 Min Read

* Says rates to rise when euro zone economic growth over 2 pct

* Says ECB had to act to prevent economic crisis (Adds quotes and background)

SPIELBERG, Austria, June 22 (Reuters) - The European Central Bank is unlikely to raise interest rates from record lows until 2016 when the euro zone economy starts to pick up more strongly, ECB Governing Council member Ewald Nowotny said in a newspaper interview.

"Interest rates will turn as soon as there is clear growth, so more than 2 percent, but from today's perspective that will hardly be before 2016," he said in an interview with the Krone paper that was posted on its website at the weekend.

He said a recovery in the euro zone was showing only signs of green shoots and the ECB's cheap money was not always making its way to companies wanting to borrow. "The psychological mood is lacking a bit," he said.

ECB staff forecast this month that the euro zone economy would grow between 0.5 and 3.1 percent in 2016.

The ECB on June 5 cut interest rates to record lows - and the deposit rate to below zero - and launched a series of steps to boost lending to companies.

"We had to react to prevent a new economic crisis," Nowotny told the paper.

ECB President Mario Draghi also said in a Dutch newspaper interview at the weekend that rates would stay low for some time.

"We have prolonged banks' access to unlimited liquidity up to the end of 2016. That is a signal. Our programme in support of bank lending to businesses will continue for four years. That shows that interest rates will remain low over a longer period," Draghi told De Telegraaf. (Reporting by Michael Shields. Editing by Jane Merriman and Nick Macfie)

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