Too early to talk of QE extension, ECB's Nowotny says

A top euro area official appeared to backtrack from remarks made only last week which had raised expectations in some corners that the European Central Bank might be closer to announcing further stimulus measures when it meets on 22 October.

Speaking to Poland's Rzeczpospolita, Austrian central bank governor Ewald Nowotny said: “I think that so far it’s too early to determine long-term trends and one needs to be aware that such low inflation is caused by low oil and commodity prices [...] in my view, we should keep calm and show that we’re in control of the situation."

Commenting on the content of the interview, Dr.Howard Archer, chief economist at IHS Global Insight, said: "the latest comments by Senior ECB policymaker Ewald Nowotny seem to dilute any likelihood that the ECB could extend its Quantitative Easing program at Thursday’s policy meeting [...] last week he stated that it is "quite obvious" to him that new measures are needed to boost Eurozone inflation as even the core rate keeps undershooting."

"In my view it’s too early to talk about (adjusting the asset purchases), because we still have almost a year of the programme ahead of us, until Sept. 2016,” the ECB rate-setter added.

To secure growth, additional measures are needed, including structural reforms and fiscal policy changes, Nowotny said.

"For a considerable time (fiscal policy) was restrictive. Now it could be described as neutral, but there may be a need for it to become expansive."