22 Dec 2014
ECB's Constancio sees negative inflation but not deflation
FXStreet (Mumbai) - European Central Bank’s Vice President Constancio said in Germany's WirtschaftsWoche magazine interview over the weekend that he expected Euro Zone inflation to turn negative in the coming months but that if this was just a temporary phenomenon, he did not see a risk of deflation.
Constancio said there had been no decision on what extra measures the ECB would take to bring about monetary easing next year, adding that the bank would, in early 2015, assess the effectiveness of measures it had taken this year.
He said the ECB needed to employ all monetary policy tools at its disposal, adding that the bank must act if inflation was too low to maintain its credibility and so would need to use channels it had not touched before. He said quantitative easing was "totally legal" and the ECB did not rule out what was legal.
Key Quotes:
"We now expect a negative inflation rate in the coming months and that is something that every central bank has to look at very closely."
"You'd need negative inflation rates over a longer period for that. If it's just a temporary phenomenon, I don't see a danger."
Constancio said there had been no decision on what extra measures the ECB would take to bring about monetary easing next year, adding that the bank would, in early 2015, assess the effectiveness of measures it had taken this year.
He said the ECB needed to employ all monetary policy tools at its disposal, adding that the bank must act if inflation was too low to maintain its credibility and so would need to use channels it had not touched before. He said quantitative easing was "totally legal" and the ECB did not rule out what was legal.
Key Quotes:
"We now expect a negative inflation rate in the coming months and that is something that every central bank has to look at very closely."
"You'd need negative inflation rates over a longer period for that. If it's just a temporary phenomenon, I don't see a danger."