The “ECB is using the monetary policy instruments available – but it is quite obvious that in the current macroeconomic situations, additional sets of instruments are necessary”, said Mr Nowotny at a conference in Warsaw.
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“These include structural measures… but also on the demand side of the economy and also on the institutional factors of the economy”. While Europe is plagued by its own troubles the euro performed well on short covering and a lack of desire to own USA dollars.
The programme, which was launched in March, is due to run to September next year but analysts now believe it will be extended.
German Bundesbank president Jens Weidmann, seen as the ECB’s most hawkish policymaker, has many times argued that the inflation target should be viewed over a longer period, giving the bank a few flexibility. A very low probability to further rates cuts.
Mr Nowotny also said the eurozone is incomplete and needs to deepen the integration of its 19 member states, a move that would end an uncertainty about the bloc’s future and improve its growth prospects.
By strengthening the euro against the dollar, it further dampens inflation.
Nowotny’s comments contrast with remarks three weeks ago when he said core inflation signals an “equilibrium” in prices, and suggests that policy makers are becoming more concerned about the outlook for the economy.
Investors were bracing for another round of weak USA data and when the jobless claims and CPI report came in better than expected, there was a wave of relief in the FX market. The Dow Jones industrial average rose 57.52 points, or 0.34 percent, to 16,982.27, the S&P 500 gained 9.27 points, or 0.46 percent, to 2,003.51 and the Nasdaq Composite added 35.80 points, or 0.75 percent, to 4,818.65.
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“If we observe that the evolution of prices is not compatible with the objective of the European Central Bank, the European Central Bank could do what it said it will do, extend the program and non-conventional measures”, Bank of Spain Deputy Governor Fernando Restoy said on Thursday in Madrid. Countries are more interlinked in production, cross-border capital flows have increased, and forward guidance has become a crucial monetary policy instrument. The European Central Bank meets next week in Malta although it isn’t scheduled to update its quarterly forecasts until December.
