MNI POLICY: ECB Won't Allow More TLTRO Cliff Edges - Praet

By Luke Heighton

     FRANKFURT (MNI) - The precise terms of new Targeted Longer-Term Refinancing

Operations "will depend on how the governing council assesses the banking

lending outlook," the European Central Bank's chief economist Peter Praet said

Wednesday.

     Praet acknowledged that several banks face a "cliff-edge" when existing

loans come due, and said it was important to "avoid creating potential new

cliffs in the future.

     "Monetary policy is working," he told an audience in Frankfurt, "but it has

faced repeated headwinds."

     The ECB's Governing Council was faced with a "delicate call" at its March

meeting, Praet said. "On the one hand, the economic expansion was clearly losing

steam and the sagging economy threatened to slow the pace at which inflation was

expected to climb back to our objective

     But he added: "Our monetary policy is bearing fruit, and we remain

confident that the labour cost pressures that have strengthened and broadened

amid high levels of capacity utilisation and tightening labour markets will

continue to support underlying inflation over the medium term."

--MNI Frankfurt Bureau; +49-69-720-146; email: luke.heighton@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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