BRUSSELS (MktNews) - In one of the clearest signs yet that the European Central Bank (ECB) could be preparing to ease monetary policy very soon, ECB Governing Council member Guy Quaden said Monday that eurozone growth prospects are increasingly uncertain, while at the same time upside price pressures are falling away.
Quaden, who is also Governor of the National Bank of Belgium, made the comments exclusively to Market News International on the sidelines of the annual meeting of shareholders of the central bank here.
"Looking forward, inflation risks are now at least more balanced and even downwards-oriented in many countries," he said.
This represents a departure for Quaden as his most recent public statements on the issue have emphasised the dangers of second-round price pressures related to high oil prices and the weak euro.
"Until now inflation in the euro area has remained too high while economic growth is still satisfactory," he said, but hinted that position is now evolving.
Quaden also pointed to the increased risks now from external events, especially the weakness of the U.S. economy and volatile global asset markets.
"Due to the deterioration of the external environment and the psychological repercussions on confidence of European entrepreneurs and consumers, uncertainty concerning future economic growth is, it now seems, increasing," he said.
This also represents a departure as most ECB officials had until now stressed that the eurozone is relatively well insulated from external events.
The ECB Governing Council next meets on Thursday (March 29), then on April 11 and April 26. The odds of a rate cut in the next two weeks have shortened dramatically in recent days as key eurozone activity data have tapered off, while equity markets remain volatile and weaker. Indeed, Quaden is the latest ECB governor to hint that a rate cut could be near. His remarks echo similar comments at the end of last week from President Wim Duisenberg, Chief Economist Otmar Issing and Bank of France Governor Jean-Claude Trichet. Quaden also said that when the Governing Council meets on Thursday, it will be closely examining the very latest data that are available. "We will have to assess the situation on the basis of the latest data at our meeting of next Thursday," he said.