ECB's Nowotny says credit not become cheaper yet

VIENNA (Reuters) - European Central Bank (ECB) Governing Council member Ewald Nowotny said on Sunday the ECB's last rate cut had not yet made credit cheaper, but that this would happen in the medium term.

"There is a delay. I believe that credit will become cheaper in the medium term, but currently we are still in a period of significant uncertainty," Nowotny said in an interview with Austrian state TV broadcaster ORF.

"Therefore this rate cut clearly has not yet had its full impact," he said in the live interview.

He reiterated comments he made on Saturday, saying that the financial markets crisis would probably be under control by spring next year, but that the impact on the real economy would show in significantly lower growth rates next year.

"The general expectation is that in spring, or the first half of next year, we have the financial markets issues under control," he said. "What then follows is the problem of the real economy, which means that growth rates in 2009 will very likely be significantly below those of 2008."

"That's why the ECB has said that we are seeing the inflation problem easing, but on the other hand the growth problem worsening, and has cut rates," he said.

Nowotny also said the ECB's sole mandate to preserve price stability had proven itself over recent years if compared with the U.S. Federal Reserve's broader mandate that also includes the goal to foster growth.

This difference in their mandates is often named as the reason for the Fed's faster and more aggressive rate cuts in times of economic slump. Some European politicians argue for a more expansive ECB policy.

"If you compare the success of the U.S. Federal Reserve and of the ECB, then I believe that the, if you like, more cautious policy of the ECB has proven itself," he said. "I don't see any need to change this mandate."

(Reporting by Boris Groendahl, editing by Will Waterman)