The euro area is no longer the economic headache that it once was, but the reversal of the European Central Bank‘s monetary policy needs to be sustainable, the president of the Eurogroup told CNBC Wednesday.
Given the clear economic improvement in the euro zone since the debt crisis, some economists and policymakers have blamed the ECB for keeping its “crisis policy” for too long, potentially creating some financial risks by leaving interest rates low for too long.
However, new Eurogroup President Mario Centeno believes the ECB needs to adapt its policy in a way that protects the ongoing recovery.
“The good news is precisely that the euro area is no longer a problem,” Centeno told CNBC at the World Economic Forum (WEF) in Davos, Switzerland. “We have 18 consecutive quarters of growth, 7 million-plus jobs that were created, the economy is strong, the political cycle is also very strong.”
But, the Portuguese finance minister said: “If you look at the (economic) cycle, the (monetary) policy during the cycle, Europe started a bit later than other economies into this. So I think we are now looking… to turn that policy in a very sustained way. It has to be sustainable and it has to continue to sustain the recovery.”
The ECB is due to meet Thursday but is unlikely to announce changes to its current monetary policy so early in the year. But analysts foresee policy changes at the following meeting in March.
The ECB should tighten its policy in a sustainable way, says Eurogroup president