PARIS (MNI) – The European Central Bank’s efforts to smooth out
market distortions caused by the Eurozone debt crisis will continue and
will not affect the bank’s mandate to ensure price stability, ECB Vice
President Vitor Constancio said Thursday.
Speaking in Frankfurt, Constancio said “we have already done a lot
in this regard and we are ready to continue doing so, while remaining
completely committed to our primary objective.”
Constancio also said the ECB was “open-minded” about extending its
non-standard policy measures when market conditions warranted.
“When, as is clearly the case at present, financial instability in
some market segments prevents a normal functioning of the economy and of
the monetary policy transmission mechanism, we must intervene to restore
our capacity to ensure price stability over the medium term,” he said.
Constancio said the central bank’s actions to ease tensions in debt
markets through its Securities Market Program or to ensure that banks
had ample access to liquidity had been “fast, targeted and decisive; and
clearly within the ECB’s mandate.”
But he said it was not the ECB’s responsibility to solve the
crisis. “The main responsibility for solving the European sovereign debt
crisis and the continuing financial crisis rests with EU authorities and
member states’ governments,” he said.
Regarding the economic outlook, Constancio echoed comments by ECB
President Mario Draghi at the bank’s monthly news conference Thursday,
saying the risks on inflation were “broadly balanced.” Deflationary
risks were very small, he said.
“The modelled probability of a deflationary episode is still very
small indeed, even if it has recently slightly increased,” Constancio
said.
— Paris Newsroom, +33142715540; jduffy@marketnews.com
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