ECB's Praet says readiness to launch QE is what is important now

WASHINGTON (Reuters) - The European Central Bank will choose the appropriate form of quantitative easing, if it were to launch it, depending on the challenge it faces, but for now it is important that the bank unanimously backed the possibility of such a policy measure.

ECB Executive Board member Peter Praet said that despite lower than expected inflation in the euro zone for several months in a row, consumer price developments were still within the banks base-line scenario.

Asked what option for quantitative easing the banks was considering and what would be the triggers for action, Praet told reporters:

"What is important to consider today is the signal that the ECB Governing Council has given with unanimity: to use all measures if the risk of too prolonged low inflation would materialise," he said.

"It is more the signal at this stage that is more important," he said.

The ECB wants to keep inflation below, but close to 2 percent over the medium term, which means 18 to 24 months.

Asked if the risk of prolonged low inflation has not already materialised when price growth slowed to 0.5 percent year-on-year in March, after staying below 1 percent since October, Praet said:

"We have a base scenario, we don't have an objective based on a monthly (inflation) figure. But it is also true that the sequence of figures of monthly inflation have been weaker than we have expected. But we are still in our base scenario."

The bank expects inflation to pick up again in April. Asked if the April number will be key to a decision whether to launch quantitative easing -- purchases of government and private securities -- Praet said:

"We will have to see. At each monthly figure we update the medium-term evolution and we will have to see what it gives. We have to analyse the figures when they come."

Commenting on ECB preference for the type of quantitative easing the bank was considering, Praet said:

"You have to see what is the most appropriate. In terms of sequencing of instruments it depends on the situation you face. We have signalled different things -- we have seen that in some cases it can be an exchange rate transmission into the pricing sector, and in other cases it may be other factors."

(Reporting By Jan Strupczewski and Jonathan Spicer)