European Central Bank officials, preparing to consider fresh stimulus for the euro area, warned governments to get moving with structural reforms and told investors to be realistic about any action monetary-policy makers might take.
Speaking at a conference in Budapest, Executive Board member Benoit Coeure reiterated that the ECB will “review and possibly reconsider” its policy stance at its March 10 meeting, while stressing that without economic reforms the region’s recovery won’t last. Governing Council member Ewald Nowotny said he hoped markets would be “more rational” than they were in December, when central-bank measures fell short of expectations and sent the euro and bond yields soaring.
Despite an unprecedented level of monetary stimulus, the ECB is struggling to revive inflation as oil prices slump and China’s slowdown drags on global trade. Factories in the euro area slashed prices of goods by the most in a year in January, a purchasing managers’ survey by Markit Economics showed on Monday, underscoring the risk that weak consumer-price pressures are becoming ingrained.
“We have always made it clear that we are ready and able to play our part,” Coeure said. “But for the recovery to become structural, and thus to increase growth potential and reduce structural unemployment, monetary policy does not suffice.”