MNI: ECB Nowotny Says Core Infla Rising Slowly But Steadily

By Christian Vits

     FRANKFURT (MNI) - The European Central bank will have to discuss how to

wind down their extraordinary measures in October given steadily increasing core

inflation and against the background of higher wage pressures in particular in

Germany, Governing Council member Ewald Nowotny said Friday.

     "Core inflation is slowly but steadily rising and we also think that we see

signs that wage developments are getting stronger," Nowotny said in a press

briefing in Washington, underlying that wage developments point into the same

direction. "There have been reaction lags, but especially in Germany we see

quite strong dynamics on the wage front."

     In October, "we will have to take decisions on our policy stance, because

the program of quantitative easing is ending at the end of this year," Nowotny

noted. "And there is a certain understanding that there will be steps towards

normalisation." In particular with regard to the quantity of assets the ECB is

going to buy, he said. "The markets are prepared for some normalisation."

     "But there still will be a lot of discussion with regard to the volumes,

with regard to the timing and with regard whether this should be an open-ended

development or better have a specific end date. I think it is too early to give

details on that."

--MNI Frankfurt Bureau; +49 69 97782671; email: christian.vits@marketnews.com

[TOPICS: M$X$$$,M$$EC$]