European Central Bank (ECB) monetary policy remains "very accommodative" despite last week's interest rate increase, and the bank could raise borrowing costs again, a member of its governing council warned yesterday.
The quarter percentage point increase in interest rates "cannot be seen as a tightening of monetary policy but rather as a re-balancing," Yves Mersch, governor of the Luxembourg central bank, said.
His comments will dismay euro-zone finance ministers, several of whom say that the bank's action would only be acceptable if there were no further increases.
In public, ECB president Jean-Claude Trichet has said that a series of rate increases is not planned. Mr Mersch is regarded as among the "hawks" on the ECB council. "We are free and ready to act whenever we feel it is necessary," Mr Mersch said.
"There is a certain neutrality [ on the ECB governing council] concerning the future [ of interest rates] but we are still unanimous in judging that our policy stance is very accommodative and conducive to the growth rate."
Financial Times service
