ALPBACH, Austria (Reuters) - There is little room for a European Central Bank interest rate hike as long as inflation is low, Austrian central bank governor Ewald Nowotny said on Friday.
“As long as we have low rates of inflation... I do not see a perspective for higher rates of interest,” Nowotny, who also sits on the ECB’s rate-setting Governing Council, told a conference. “
“Interest rates do have an important element not only on the macroeconomic side but they also have to play an important role as signaling in a market economy,” he added.
Euro zone inflation rose to 1.5 percent in August but is expected to undershoot the ECB’s target of almost 2 percent for years to come.
The ECB has pledged to keep its key rate, now at -0.4 percent, at its current level until well past the conclusion of its asset purchases.
Reporting by Kirsti Knolle; Writing by Balazs Koranyi; Editing by Francesco Canepa