HAMBURG, Nov 16: Europe is neither in a recession, nor is there any danger it might slip into recession, even if the current economic environment is very uncertain, Bundesbank President Ernst Welteke said in a newspaper interview published on Friday.
We’re not yet in a recession. And I don’t see any danger of a recession, Welteke told the daily Hamburger Abendblatt.
However, further economic developments were characterised by great uncertainty. A lot depends on whether consumer and investor confidence can be given a boost, the German central bank chief said.
As head of the Bundesbank, Welteke sits on the European Central Bank’s governing council, the body responsible for setting interest rates for the 12 countries which share the euro.
Welteke said that monetary policy alone could not jolt the economy back to life.
If someone is scared of flying, he still won’t fly if tickets are made cheaper. An investment which depends on whether interest rates are a quarter of a percentage point higher or lower is a bad investment.
Monetary policy could only be a supporting measure, but could not kick start the economy.
Only structural reform could achieve that and a climate which nurtures security and confidence.
Welteke rejected the suggestion that the ECB had waited too long to cut its key rates by half a percentage point last week compared with the more agressive monetary policy practised the United States Federal Reserve.
The ECB’s task is to safeguard price stability. Its interest rate decisions have therefore been appropriate.—AFP
