FRANKFURT (Reuters) - The European Central Bank should decide sooner rather than later whether to start large-scale purchases of government bonds, ECB Governing Council member Ewald Nowotny said in a newspaper interview published on Tuesday.
The ECB Governing Council will gather for its next policy meeting on Jan. 22 and could decide then to start printing money to buy large amounts of government bonds, something also known as quantitative easing (QE), to avert deflation.
"I personally think that it would be sensible to come to a decision sooner rather than later," Nowotny, governor of the Austrian central bank, told Austrian newspaper Der Standard in an interview published on its website on Tuesday.
"There is all sorts of speculation in the markets and I think that a central bank should provide clarity over its strategy as soon as possible," Nowotny said.
Nowotny also pointed out that the ECB's balance sheet was shrinking in contrast to other major central banks as euro zone banks tended to repay central bank funding. This could lead to a tightening of monetary policy if the ECB did not act.
"That means in more concrete terms, I think it would make sense to act on the monetary policy front," Nowotny said.
The euro zone economy is mired in low growth, high unemployment and weak price developments and the ECB is trying ease banks' access to funding to unblock lending to the real economy and spur growth.