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- ECB should be ready to disappoint markets sometimes - ECB's Nowotny
ECB should be ready to disappoint markets sometimes - ECB's Nowotny
The European Central bank has in the past gone too far in seeking to meet market expectations and should be prepared to disappoint the market sometimes, outgoing ECB policymaker Ewald Nowotny said.
Nowotny's remarks echoed comments on Tuesday by ECB Vice President Luis de Guindos, who said the ECB must be critical of market expectations and base its decisions on macroeconomic data.
"In past years we perhaps followed markets' expectations too intensively and avoided disappointing them," Nowotny, whose term as governor of the Austrian National Bank ends this weekend, told.
"I am of the opinion that central banks should be the decisive institution and must therefore sometimes disappoint markets," said Nowotny, who will be succeeded by pensions specialist Robert Holzmann.
He did not elaborate on what kind of disappointment he had in mind.
Nowotny said he favours inflation targeting along the lines of what the Czech, Israeli or Swedish central banks do -- aiming for 2% plus or minus one percentage point. "I would support such a view because it means that inflation of 1.6% is also within the target area and therefore requires no monetary policy measures," Nowotny said.
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