UPDATE 2-ECB's Constancio watching more than just April inflation data

Mon Apr 28, 2014 2:02pm EDT

* Constancio says has no target for April inflation data

* Says ECB has "several tools available"

* Noyer says a strong euro is a powerful deflationary factor

* Draghi tells meeting QE remains "some way off" - source (Adds Draghi, IMF official)

By Eva Taylor

FRANKFURT, April 28 (Reuters) - The European Central Bank's vice president said on Monday that April's inflation figures due later this week should not alone trigger a policy change because "it's not just one or two numbers that matter".

Separately, ECB President Mario Draghi told lawmakers from Germany's ruling coalition that low inflation would persist but quantitative easing remains a way off, according to a source who took part in the meeting in the German city of Koenigswinter.

Euro zone inflation is running at 0.5 percent - far below the ECB's medium-term target of just below 2 percent. The April data are due on Wednesday. A Reuters poll points to a reading of 0.8 percent.

But ECB Vice President Vitor Constancio told reporters in Frankfurt: "I do not have any target in mind. It's an important information but not the only aspect that can lead to any decision.

"What we need is a more fundamental view on a possible revised medium-term path for inflation. It's not just one or two numbers that matter."

Constancio's comments appeared at odds with remarks last week from another member of the ECB's policymaking Governing Council, Luc Coene, who said a lower-than-expected April reading could trigger policy action.

The ECB holds its next policy meeting on May 8, in Brussels.

Asked if the ECB had any policy tools ready to go, Constancio replied: "There are several tools available. As we've said before, we will act if we need to."

Last week, Draghi gave his clearest indication yet that the central bank could print money to buy assets if the outlook for inflation deteriorated, and identified a rise in the euro as a potential trigger for action.

EXCHANGE RATE DRAG

On Monday, Draghi told German lawmakers he did not currently see a deflation scenario, according to the source who attended the meeting. But the source said the ECB chief did see "a problem of ongoing low inflation rates, which could lead to measures".

"He mentioned quantitative easing in this context but made clear that we're still some way off QE," the source added.

Another heavyweight ECB policymaker, Christian Noyer, said in Paris on Monday that the euro's current strength was a powerful deflationary factor and low inflation was likely to persist in the euro zone for some time.

"An increase in the exchange rate is equivalent to an unintended and unwanted tightening of monetary policy," Noyer, who is also governor of the Bank of France, said in an annual letter to the French president.

At about $1.38 currently, the euro's strength drives import prices lower and weighs on overall inflation.

Noyer's comments echoed remarks on the exchange rate from Draghi, who last Thursday reiterated the ECB's message that "the exchange rate is an increasingly important factor in our assessment of the outlook for price stability".

Constancio listed several challenges facing the euro zone, including "a low inflation period that threatens to aggravate the burden of the debt overhang still besetting governments and private economic agents".

He said the bloc also still faces major challenges in terms of lacklustre growth, excessive unemployment and significant financial fragmentation - or uneven financial conditions.

The euro zone had made encouraging progress after facing the risk of break-up two years ago but this "does not mean we are entirely out of the danger zone", the vice president said.

"We have certainly turned a corner and stabilised the situation," he added. "(But)... it is too soon to declare that the crisis is over."

A senior International Monetary Fund official said on Monday the ECB should do "everything it can" to tackle low growth and inflation but governments must also shape up their economies.

Jose Vinals, director of the IMF's monetary and capital markets department, said a multi-pronged policy approach was needed to buoy the 18-country euro zone. (Additional reporting by Leigh Thomas in Paris and Matthias Inverardi in Koenigswinter, Germany; Writing by Paul Carrel; Editing by Jeremy Gaunt and Alison Williams)