The European Central Bank must reverse its stance from accommodative monetary policies seen during the global economic crisis, ECB chief economist Juergen Stark said today in a newspaper article.
In remarks that underscored the chances of an ECB rate hike next week, Stark wrote in the Financial Times that because inflation could accelerate, 'the ECB needs to reverse its stance'.
The bank cut its benchmark lending rate to a record low of 1% as growth faltered across the euro zone and some peripheral countries fell into debt and public deficit crises.
Those crises have subsided for now at least, and growth has returned to core countries, which along with higher commodity prices has pushed inflation up to 2.4%, above the bank's medium-term target of just below 2%.
The ECB is thus expected to raise its key interest rate to 1.25% next Thursday, with more increases possible later in the year depending on economic conditions.
Although some argue that precarious economic recoveries in some countries called for maintaining benign monetary conditions, Stark said: 'Europe's central bank must favour no nation'.
Exceptional measures taken by the ECB 'can not replace the needed repairing and strengthening of bank's balance sheets and public finances,' he added.
