FRANKFURT (MNI) – Stagnation in the Eurozone is a greater risk than
inflation, European Central Bank Governing Council member Ewald Nowotny
said Tuesday.
“I do not fear inflation, but rather stagnation. A stagnation
scenario in Europe unfortunately cannot be discounted,” Nowotny told
students in Vienna, according to the Salzburger Nachrichten newspaper.
Nowotny, the governor of the Austrian National Bank, acknowledged
some price uncertainty stemming from the situation in the Middle East,
warning that a larger war in the region could push up energy prices. But
such temporary price increases are normal in a modern industrial
economy, he said. Inflation should fall under 2% in the longer term, he
added.
Nowotny also was reported to defend EMU aid for Greece, warning of
contagion risks if Greece were to leave the euro.
He said he saw global growth slowing, with economies in the United
States and Asia growing less than in the past. He forecast growth in
Austria of 0.5-1.0% this year.
— Frankfurt bureau: +49 69 720 142; email: ccermak@mni-news.com
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