UPDATE 1-ECB rate hike small step toward normalcy-Nowotny

(Adds comments to Austrian television)

VIENNA, April 7 (Reuters) – A quarter-point interest rate
hike by the European Central Bank on Thursday marked “a small
step” toward the “return to normal standards,” with rates still
well below levels before the financial crisis, ECB Governing
Council member Ewald Nowotny was quoted as saying.

The Austria Press Agency also quoted him as saying the
European economy’s upswing had become self-sustaining despite
problems in individual countries but that the rate rise would
have practically no impact.

He later told Austrian television that the ECB had weighed
improving growth rates against rising inflation and had decided
to raise rates.

“This constellation — where growth is better and at the
same time that we can see a certain inflation trend — it is
understandable that a central bank must act in terms of a
normalization,” he told broadcaster ORF.

He also said the quarter-percentage-point rate rise was
“not a massive amount,” adding: “But it shows and should signal
that the ECB on the one hand sees a better economic situation
and on the other hand takes the question of avoiding price
rises very seriously.”

He would not say how much faster the ECB would continue to
raise rates because the central bank needed to study the
economy carefully at each step.

“We will tend toward a normalization,” he said.

Portugal, which has asked for a bailout, should have called
for help earlier, Nowotny said, but added the country’s
relatively small economy meant it did not endanger the euro
zone as a whole.

Asked whether Spain could be the next country to use the
financial safety net, Nowotny said he did not see this
happening as the country’s economic situation had improved.

“About half a year ago I would have said there was actually
a risk of contagion. In the meantime things have developed very

“Spain has set up, on its own initiative, very practical
and intensive programs. The markets are now judging this is a
very different way,” he said, adding that he did not think
there was a risk of contagion for Spain.
(Reporting by Michael Shields and Sylvia Westall)

UPDATE 1-ECB rate hike small step toward normalcy-Nowotny