Europe must tackle financial bubbles locally: ECB’s Praet

FRANKFURT (Reuters) – The euro zone is not yet at risk from financial asset bubbles but ultra low rates can endanger stability, so countries need to enact local measures to address pockets of excesses, European Central Bank chief economist Peter Praet said on Thursday.

“Keeping rates low for long periods can raise challenges for financial stability further down the road,” Praet said in a speech. “In this context, activating macroprudential instruments where needed is essential to ensure resilience, contain procyclical behaviors and prevent the emergence of financial imbalances.”

The ECB has kept rates in negative territory for years and expects to raise them only very slowly, arguing that its primary mandate is raising inflation back to target and not to ensure financial market stability.

“There is no evidence of excessive misalignment across asset classes in the euro area right now, there are signs that valuations are stretched in specific market segments,” Praet said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.