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30 May 2014
ECB's Visco reiterates readiness to act if inflation is projected to remain low for longer
FXStreet (Łódź) - Speaking at the annual Bank of Italy meeting, Governor Ignazio Visco, who is also a member of the ECB Governing Council, said that in order to maintain price stability the ECB is prepared to act firmly on indications that inflation in the Eurozone is set to remain low for an extended period of time.
“Excessively low inflation must be countered with equal firmness, also to prevent it from being incorporated into medium-term expectations,” Visco said. “The formation of expectations is not a linear process: even large changes can materialize very quickly, discontinuously.”
Visco reiterated that the euro exchange rate was not a policy target but that the currency's strength had been a factor in keeping inflation subdued. He added however that the situation of the Eurozone economy improved considerably although the recovery was still rather weak.
Moreover, the ECB policymaker remarked that the economic recovery in Italy was fragile and uncertain and that it should be propped up by more investment. He signaled BoI's readiness to implement measures to improve the liquidity of banks in order to boost their lending to businesses. He also stressed that reducing the debt to GDP ratio was a top priority.
EUR/USD fell slightly to 1.3604 following Visco's comments.
“Excessively low inflation must be countered with equal firmness, also to prevent it from being incorporated into medium-term expectations,” Visco said. “The formation of expectations is not a linear process: even large changes can materialize very quickly, discontinuously.”
Visco reiterated that the euro exchange rate was not a policy target but that the currency's strength had been a factor in keeping inflation subdued. He added however that the situation of the Eurozone economy improved considerably although the recovery was still rather weak.
Moreover, the ECB policymaker remarked that the economic recovery in Italy was fragile and uncertain and that it should be propped up by more investment. He signaled BoI's readiness to implement measures to improve the liquidity of banks in order to boost their lending to businesses. He also stressed that reducing the debt to GDP ratio was a top priority.
EUR/USD fell slightly to 1.3604 following Visco's comments.