June 7, 2019 / 6:50 AM / 2 months ago

New TLTRO to keep favorable financing for banks: ECB's Vasle

LJUBLJANA (Reuters) - The ECB’s new targeted longer-term refinancing operations (TLTRO) are important because they keep favorable financing for banks, ECB Governing Council member Bostjan Vasle said on Friday.

He added that the euro zone’s central bank is ready to use “other available measures” beyond those adopted on Thursday if needed. Apart for setting conditions for the new TLTROs, the ECB said it will keep interest rates unchanged at least till the middle of the next year.

“It is of key importance that the instrument (TLTRO) keeps favorable conditions of financing for banks and thus supports transmission of monetary policy into banks’ credit activity,” Vasle said in a statement.

He said the biggest risk facing euro zone growth is the possibility that conditions internationally could worsen further, which could slow trade.

On the other hand favorable financing conditions and high domestic demand support euro zone economic growth, he added.

After the ECB cut its growth and inflation forecasts on Thursday, Vasle said persistent low inflation is a consequence of moderate economic growth, weaker energy prices and less pressure on price growth from wages in recent years.

“The council of governors has responded to these movements by adjusting its decrees with a purpose of ensuring the necessary accommodation line of its monetary policy also in worsened conditions,” Vasle said.

Reporting by Marja Novak; Editing by Catherine Evans

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