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They wouldn’t dare give the rising budget deficits any credit.
by Christian Vits
May 18 (Bloomberg) — European Central Bank Governing
Council member Axel Weber said the bankâ€™s monetary policy is
increasingly stabilizing the economy.
â€œMonetary policy is contributing significantly to the
stabilization of the economy and its effectiveness is
increasing,â€ Weber, who heads Germanyâ€™s Bundesbank, said in a
speech in Dusseldorf today. After a â€œmassiveâ€ reduction of the
ECBâ€™s benchmark interest rate, the present level of 1 percent
â€œis appropriate in the current environment,â€ he said.
In additional to cutting its key rate by 3.25 percentage
points since early October, the ECB has announced it will buy 60
billion euros ($81 billion) of covered bonds and extend the
maturities in its unlimited refinancing operations to 12 months.
Weber said providing banks with as much money as the need
is â€œof particular importanceâ€ and extending the maturities of
the loans â€œcertainly will push the yield curve even lower.â€
The plan to buy covered bonds is in line with the ECBâ€™s strategy
of supporting the banking channel, he said.