Euro exchange rate is at long-term equilibrium-senior EU official

BRUSSELS, April 25 Fri Apr 25, 2014 11:51am EDT

BRUSSELS, April 25 (Reuters) - Euro zone finance ministers will discuss the euro's exchange rate and its economic impact on May 5, but the exchange rate is near its long-term equilibrium and the discussion is unlikely to grow contentious, a senior EU official said on Friday.

The European Central Bank, whose representative will take part in the ministerial discussions on May 5, said earlier in April that the strengthening of the euro exchange rate was an important factor behind the sharp slowdown in inflation.

The bank also said that if the euro appreciated further, the ECB would respond with monetary policy, to keep the overall policy bias unchanged.

"The euro exchange rate is more or less in a long-run equilibrium situation," the official said. "Recent exchange rate shifts have contributed to the below-average inflation as well as other factors, like sinking commodity prices.

"I don't expect any contentious discussion on exchange rate policies, just looking at the contribution of exchange rate movements to the current economic situation. I don't expect it to go beyond that," said the official, who takes part in the preparation of the meeting.

He also said that euro zone ministers were unlikely to comment on possible plans by the ECB to start unconventional monetary policy loosening, for instance through bond purchases, at the meeting.

"I do not expect any comments on the actual monetary policy from members of the Eurogroup. The economic situation per se, which is not uninfluenced by the level of inflation, will be the focus of the ministers' interventions," the official said. (Reporting By Jan Strupczewski and Martin Santa; Editing by Larry King)

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