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Ahead of rate meeting, ECB's Lautenschlaeger sees very high hurdles to more easing

Published 29/11/2014, 12:23
© Reuters. European Central Bank (ECB) executive board member Lautenschlaeger attends at a news conference at the ECB in Frankfurt

By Andreas Framke

BERLIN (Reuters) - ECB Executive Board member Sabine Lautenschlaeger said on Saturday she saw little room for further easing of monetary policy despite a further fall in euro zone inflation.

She added that the effects of large scale soverign bond buying would not be positive.

"For me, given the current situation, the hurdles for further measures are very high, especially for broad purchase programmes," she said according to an official translation of her speech in Berlin, five days ahead of the ECB's next Monetary Policy Committee meeting.

Innovation in monetary policy was not a taboo, but must also not be an "end in itself", she said, adding careful consideration of its efficiency was necessary.

The ECB has cut interest rates to practically zero and is readying more buying programmes that could include government bonds - known as quantitative easing - to ward off the threat of deflation in the euro zone.

Vice President Vitor Constancio said this week the ECB could make a decision on government bond-buying in the first quarter if the economy did not improve.

The purchase of government bonds would be viewed extremely critically in Germany.

Lautenschlaeger said the interest on national government bonds in the euro area didn't operate as a benchmark for all further refinancing operations, as is the case in Britain or the United States.

"In my view, a consideration of the costs and benefits, and the opportunities and risks of a broad purchase programme of government bonds does not give a positive outcome at the current time."

© Reuters. European Central Bank (ECB) executive board member Lautenschlaeger attends at a news conference at the ECB in Frankfurt

German European Central Bank policymaker Jens Weidmann said on Friday it was illusory to think central banks could increase a country's growth potential for a sustained period of time.

(Editing by Jeremy Gaunt)

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