FRANKFURT (Reuters) - The European Central Bank will guard against money market interest rates rising too rapidly, Executive Board member Benoit Coeure was quoted as saying on Tuesday.
Coeure also told German daily Boersen-Zeitung that the central bank would start to remove liquidity from the financial system if it saw signs of asset bubbles or inflation building, but added that that was not the case at the moment.
“We want to ensure that money market rates do not overreact - also not to positive economic data from the euro zone,” Coeure told the paper in an interview.
“Their reaction should be appropriate to the economic situation.”
Money market interest rates have started to climb in the euro zone. This is partly due to external factors, especially the U.S. Federal Reserve signalling it will slow its asset purchases, but stronger-than-expected economic data within the 17-country bloc has also put pressure on the rates.
Coeure also said that “purely legally” the ECB was not bound by the eventual German Constitutional Court decision on the ECB’s OMT bond-buying program.
The court held hearings in June regarding the legality of the program, with the decision expected this autumn.
More than 35,000 Germans had filed complaints against the program to buy up the debt of stricken southern euro zone states, claiming it violates the central bank’s mandate for price stability and amounts to illegal back-door financing of governments.
Reporting by Sakari Suoninen; Editing by Ruth Pitchford