FRANKFURT, March 11 The European Central Bank
made its forward guidance more precise at its March meeting, but
markets seemed to have missed some of the message, ECB Vice
President Vitor Constancio said on Tuesday.
The part of the message that failed to get through was the
emphasis on slack in the euro zone economy, Constancio said. He
also pointed out the ECB still had policy measures in reserve,
such as lower interest rates or quantitative easing, if they
"All the messages were not taken in completely," Constancio
told MNI news agency in an interview. "The forward guidance was
made more precise in relation to the existence of this slack.
Unfortunately ... this was not picked up by the markets."
At its March policy meeting last Thursday, the ECB left
interest rates on hold and introduced no other measures to
bolster the fragile euro zone recovery, despite forecasting low
inflation for years to come.
ECB President Mario Draghi also described as "relatively
limited" the benefits of one technical option for loosening
lending conditions, suggesting the bank would either do nothing
or else take bold policy action should the outlook deteriorate.
Constancio stressed that the ECB still had policy options
"We have tools on the table that we consider as available to
use if the need arises. And that includes, as it has been said,
either cuts in rates or QE or asset purchases," he said.
The ECB's main scenario was for a gradual economic recovery
and a gradual increase in inflation rates.
"If it does not materialize, then that's a different
environment and that's when other instruments would be available
to use," Constancio said. "So this does not mean that we are on
hold regardless of the developments of the situation. That's not
true. We keep, of course, looking as always to what is happening
to the economy."