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ECB's Nowotny Sees No Deflation Perspective

European Central Bank Governing Council member Ewald Nowotny said on Friday that there is no risk of deflation in the euro area.

"What we see is that inflation perspectives are well anchored," Nowotny said on the sidelines of a conference in Paris.

"So we have low inflation but we do not have deflation," he said. " I do not see a perspective of deflation."

Nowotny, who also heads the Austrian central bank, said record low interest rates in euro area cannot be seen as an equilibrium. On November 7, the ECB cut the key interest rate by a quarter-point to a record low 0.25 percent, given the combination of low inflation, record unemployment and a stronger currency.

However, the policymaker pointed out there is unlikely to be any chance of raising interest rates in near future as the economy faces a long-term stagnation.

Further, Nowotny said he was not optimistic regarding the EU reaching an agreement over the single resolution mechanism, which is meant to deal with weak banks, by year-end. This is a key pillar in the EU banking union.

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