Sunday, January 20, 2013

European Central Bank's Praet says euro zone economy still shrinking

European Central Bank Executive Board member Peter Praet warned Europe's economy was still shrinking, making it necessary for euro zone states to continue their reforms, and he dismissed fears low interest rates could spur higher inflation in Germany.

In an interview with German newspaper Frankfurter Allgemeine Sonntagszeitung published on Sunday, Praet said although financial markets were now significantly calmer it was too early to say the euro zone crisis had ended, and the single currency bloc should not rely on the ECB alone.

"Unfortunately we are still in a phase were the economy in Europe is shrinking... there are some positive signs, but it is not yet clear whether we are at a turning point," he said.