ECB policymakers say ready to act; Linde cites FX concern
FRANKFURT/MADRID (Reuters) - The European Central Bank is ready to use non-standard tools to deliver stable prices, board member Peter Praet said on Wednesday, and Spanish central bank chief Luis Maria Linde said new measures may be needed in the coming months.
"We will act if we think it is necessary to act. We are not there yet," said Praet, who is in charge of the ECB's economics portfolio and is a member of the six-member Executive Board that forms the nucleus of the policymaking Governing Council.
In Madrid, Linde said further appreciation of the euro could prompt policy action.
The ECB left interest rates at a record low 0.25 percent last week and took no other policy action, despite forecasting low inflation for years to come. The lack of action was significant - last month, ECB President Mario Draghi had signalled that by the March meeting the bank would have enough information to judge the need for fresh stimulus.
Inflation has been in what Draghi calls the "danger zone" below 1 percent for five months now. It was running at 0.8 percent at last count.
"The ECB has reacted adequately to Europe's economic situation. It's true that prices have evolved away from that 2 percent target," Linde said. "It's also true that in the coming months there will be decisions to take. In 2015 the LTROs are expiring ... so there are decisions to take in coming months.
"In its announcements, the ECB has said that it will maintain its accommodative monetary policy," Linde added. "Depending on events, there may be new measures. If the euro keeps appreciating against the dollar, that could lead to additional measures."
The euro got a boost following last week's ECB meeting, heading towards $1.40.
Praet said demand as well as supply factors were behind the weak prices in the euro zone, which was extending into the medium term.
"Economic uncertainty has increased. So, too, has our toolbox, which now also includes various non-standard measures - which we are ready to use to achieve our price stability mandate," Praet said in the text of remarks for delivery at a conference in Frankfurt.
Praet said the ECB reinforced its forward guidance at its policy meeting last week "by adding a new element, which is the allusion to economic slack".
ECB President Mario Draghi told a news conference after the March 6 policy meeting that the bank's policy stance would stay in place "even after we see improvements in the economy" because of the slack.
(Reporting by Eva Taylor and Paul Carrel in Frankfurt, and by Sarah White and Paul Day in Madrid)
