FRANKFURT (MNI) – The European Central Bank will need to “monitor
the degree of accommodation of monetary policy” and possibly correct it
if needed as the economic recovery picks up speed and inflation
pressures mount, ECB Executive Board member Lorenzo Bini Smaghi said in
an interview published Friday.
Commodity price increases will “have an unavoidable impact,” the
central banker told the daily newsletter Bloomberg Brief: Economics.
“It is a key challenge for monetary policy to avoid spillovers and
maintain inflation expectations in check. This requires the ability to
take pre-emptive actions if needed,” he said.
In January, energy prices boosted Eurozone inflation to a 27-month
high of 2.4%, while the European Commission reported that households’
price expectations rose above average to their highest level since
before the crisis.
Bini Smaghi also stressed that “the continued firm anchoring of
inflation expectations is essential” and reiterated the ECB’s price
stability objective.
“The ECB has clearly and repeatedly communicated its alertness,” he
reminded.
The central banker reaffirmed that the ECB was responsible for
monetary policy for the Eurozone as a whole and would not tailor it to
individual economies.
“The degree of heterogeneity plays no role in setting the
appropriate monetary-policy stance,” he said. “It is the task of other
policies to avoid the emergence of imbalances, especially in asset
prices, which in turn may lead to divergent economic trends.”
— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
[TOPICS: M$$EC$,M$X$$$,MGX$$$]