The European Central Bank could raise interest rates before eliminating all its non-standard liquidity measures, ECB executive board member Juergen Stark was quoted as saying today.
Mr Stark was also quoted as saying the ECB should stop its bond-buying programme as soon as markets functioned properly to avoid distortions, and urged public unity among council members.
"I want to clarify that we always have the possibility to change our monetary policy even before we have eliminated all the extraordinary liquidity measures," Stark told Italian daily Il Sole 24 Ore.
Mr Stark repeated the Governing Council's stance on interest rates, calling the central bank's current rates appropriate and monetary policy stance accommodative.
"I consider monetary policy appropriate," he told the newspaper. "But I note that with the recent improvement in the economic situation it has become more accommodating."
While euro-zone growth is expected to slow in the second half of the year, it should remain moderate and not too much should be made of any lower growth, Mr Stark said.
He also rapped Bundesbank president Axel Weber for his public dissent on ECB policy. Mr Weber said last week the ECB's bond-buying programme had not worked and should be scrapped.
Asked about Mr Weber's recent behaviour, Mr Stark said in the interview, conducted jointly with two other newspapers, that the ECB "must speak with a single voice after assessing carefully the pros and cons of a decision."
"The council discussions must take place in private, not in public," he said.
In extracts from the interview released yesterday, Mr Stark was quoted as saying money markets were now normalising but the ECB had no commitment on ending nonstandard liquidity measures.
"We are in the process of phasing out and we are now seeing clear signs of reactivation and normalisation in the money markets," he said.
"We have to avoid our measures intervening in functioning markets. Then, the bond-purchase programme could get out of hand and become quasi-fiscal policy."
Reuters