European Central Bank Governing Council member Ewald Nowotny said policy makers must take deflation risks seriously and shouldn’t wait too long to react.
While the euro area isn’t in a situation where price declines lead to postponed spending, “it is important that one takes deflation risks seriously and addresses them,” Nowotny, who is also governor of the Austrian central bank, said during a panel discussion late yesterday in Vienna. “We shouldn’t wait too long with a reaction.”
The ECB is preparing to discuss large-scale asset purchases at a Jan. 22 meeting after a slump in oil prices sparked the first decline of annual consumer prices in more than five years. Policy makers disagree over whether so-called quantitative easing is needed, with officials including Bundesbank President Jens Weidmann arguing against fresh stimulus and others including ECB Chief Economist Peter Praet pressing ahead.