By Todd Buell

 

FRANKFURT--Talk of the European Central Bank ending its very accommodative policy is "premature", the central bank's chief economist said in an interview published Friday.

While "the deflation risk is gone" and the growth picture has improved, "the economic outlook is still conditional on maintaining a substantial degree of monetary accommodation. Talks about exit are premature," said Peter Praet in an interview with Italian newspaper Il Sole 24 Ore, which was published in English on the ECB's website.

Mr. Praet said "the Governing Council has not signaled a change in the monetary policy stance, including its forward guidance," he said. "Our forward guidance has served us well and led to financial conditions that are appropriate. We reiterated it," he said. "We had no discussion on sequencing in the Governing Council."

Recently there had been suggestions that the ECB would deviate from its forward guidance, which says that it will keep interest rates at current or lower levels until well past the end of its bond purchase program.

He said he was worried about "the populist narrative that things were better before the euro. This is a deception!"

In the case of Italy, he said that "the nostalgic alternative that everything will be all right just by returning to the lira amounts to fooling the people. The cost of a regime change would be huge and the poor would be the ones that suffer the most."

 

-Write to Todd Buell at todd.buell@wsj.com

 

(END) Dow Jones Newswires

March 24, 2017 05:04 ET (09:04 GMT)

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