Economic recovery in the euro zone is still in its initial phase making a withdrawal of stimulus measures premature, European Central Bank governing council member George Provopoulos said today.
With the recovery in the euro area in its initial stages and with economic activity still far below pre-crisis levels, it is too soon to begin a withdrawal of the stimulus measures," Mr Provopoulos, who heads the Bank of Greece said in a speech at an economic conference at the Greek central bank.
"The challenge will be to choose the correct timing of the withdrawal," he said.
Mr Provopoulos said the ECB would promptly withdraw any non-standard measure that may pose a threat to price stability in the medium term.
He said the large increases in fiscal deficits and public debt to provide stimulus have raised concerns in financial markets, as evidenced by the widening of sovereign spreads.
"Governments will need to start addressing mounting long-run fiscal challenges by committing to large reductions in deficits once the recovery is on a solid footing," Mr Provopoulos said.
He said Greece is among the euro zone countries most threatened by fiscal slippage.
Reuters