–Adds fuller quotes from Mersch press conference

LUXEMBOURG (MNI) – Whether or not Spain will call on the EU/IMF
fiscal stabilization fund is a decision that will be taken “at the
executive level” but for now it appears that Spanish officials see no
need for such aid, European Central Bank Governing Council member Yves
Mersch said Wednesday.

“According to declarations I have heard from Spain, they don’t seem
to think they need the program,” Mersch said at a press conference in
which he presented the annual report of the Central Bank of Luxembourg,
which he heads.

He also said that medium- to long-term inflation expectations are
“totally in line with our definition of price stability,” which is close
to but below 2%. “We are totally committed to preserving the result that
we have attained,” he said, claiming that the ECB had the best price
stability track record of any central bank over the past decade.

Mersch also noted that inflation forecasts for the Eurozone fall
into a “particularly close range,” which “proves again the [inflation]
anchoring and the success of our policy of assuring price stability.

He cited a passage from the recent introductory statement of the
Governing Council that the “monetary policy stance will be adjusted when
it is appropriate.”

Asked whether he could ever envision a conflict between the ECB’s
price stability mandate and financial stability in the Eurozone, Mersch
replied: “We have one objective – price stability.”

He said the ECB’s non-standard measures — which include an array
of supplementary liquidity operations and, more recently, a sovereign
bond purchasing program — are “temporary.”

Asked whether the results of stress tests of European banks should
be published, Mersch said it was too early to say.

He noted that Greece’s austerity program had been approved by top
EU authorities, including the ECB, and that progress to date has been
assessed as “in line with what was required.”

“If that is true,” then Greece will be embarking on an
unprecedented course of fiscal consolidation, Mersch said.

He said that the appropriate strategy to reduce budget deficits is
to specify the measures, distribute them over a number of years, and
implement them according to the timetable. “That’s what is happening in
Greece.”

–Paris newsroom, +331-42-71-55-40; stephen@marketnews.com

[TOPICS: M$$EC$,M$$CR$,MGX$$$,MT$$$$,M$X$$$]