AIX-EN-PROVENCE, France (Reuters) - The European Central Bank’s decision to break with precedent by declaring it would keep interest rates at record lows for an extended period is fully in line with its mandate, ECB policymaker Christian Noyer said on Saturday.
“Forward guidance is fully anchored to our mandate and in line with the two pillars of our strategy,” Noyer said, referring to the ECB’s inflation mandate and, for the pillars of the strategy, to real economy and monetary developments.
The European Central Bank broke with precedent on Thursday by declaring it would keep interest rates at record lows for an extended period and may yet cut further, responding to turbulence caused by the U.S. Federal Reserve’s exit plan from money-printing.
On a day when the Bank of England also gave a steer about future interest rate moves, ECB President Mario Draghi followed suit, abandoning the euro zone central bank’s customary insistence that it never precommits on policy.
Draghi did not say exactly how long ECB rates would stay at record lows. It left interest rates at 0.5 percent.
Noyer, who is also Bank of France governor, told an economists’ conference in Aix-en-Provence, southern France, that strengthening regulation of financial markets is necessary to reducing risks.
Reporting by Ingrid Melander; editing by Elena Berton and James Jukwey