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ECB must be ready to move rates fast in either direction, Austrian cenbank governor tells WSJ

BY Reuters | ECONOMIC | 08:56 AM EST

March 2 (Reuters) - The European Central Bank should be prepared to move its key interest rate in either direction if potential threats to the eurozone economy arising from a fresh increase in uncertainty come to pass, Austria's central bank governor Martin Kocher said in an interview to the Wall Street Journal published on Monday.

Kocher, who is also an ECB policymaker, told the Journal that increased uncertainty since the start of the year made it possible that the key rate would be lowered again, and also possible that the next move would be an increase.

Disruptions to oil markets or shipping through the Strait of Hormuz could increase costs and therefore inflation, while heightened tensions could weigh on economic activity, he added.

(Reporting by Rishabh Jaiswal in Bengaluru Editing by Gareth Jones)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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