European Central Bank Governing Council member Ewald Nowotny said Thursday night that he is worried about the economic situation in the euro zone, stressing that growth this year will underperform previous expectations. Speaking at a dinner for journalists in this alpine resort town, Mr. Nowotny, who also heads Austria's National Bank, said that he expected a considerable take up at the ECB's targeted, longer-term refinancing operation, which is due to be launched in mid-September. "Any bank treasurer who doesn't go for it, is making a big mistake," he said. In June, the ECB announced that it would offer such targeted loans with the expectation that banks would pass them on to the real economy. The first two are in September and December of this year. Experts see a revival of credit to the real economy as an important factor in supporting economic growth in the euro zone. Data released Thursday showed lending to the private sector declined again in annual terms in July, but the drop wasn't as sharp as in the previous month. Addressing the economic situation in the euro zone, Mr. Nowotny said, "I am also worried. What I have described to you is not a success story. We had expected a rebound in the euro zone." He went on to say that growth in the euro zone this year is still expected to outperform last year's, "but it will be weaker than expected." Mr. Nowotny also added that a key message of ECB President Mario Draghi's speech given in Jackson Hole, Wyoming last week was that there was a need to focus on "budget consolidation [that is] more growth friendly." Mr. Draghi made waves by suggesting that euro zone austerity policies had gone too far. "It would be helpful for the overall stance of policy if fiscal policy could play a greater role alongside monetary policy, and I believe there is scope for this, while taking into account our specific initial conditions and legal constraints," said the ECB president. Mr. Nowotny said he would not discuss current monetary policy topics, since his remarks were within one week of an ECB policy meeting. ECB Governing Council members often don't comment on current policy during what is sometimes called the "Purdah period." The next ECB meeting is September 4th. The central banker, however, said he viewed the ECB's monetary policy as placed in the middle between American critics who think it is too restrictive and those--for example from the Bank for International Settlements--who have expressed concern that loose monetary policy is contributing to asset bubbles. "We have an expansive monetary policy, but with caution," he said. Commenting on the current economic dispute between Russia and the European Union over the former's behavior with respect to Ukraine, Mr. Nowotny suggested that adverse economic consequences would be more acutely felt next year. link