(Adds comments, background)
By Jonathan Spicer
NEW YORK, April 14 The European Central Bank
stands ready to take unconventional policy steps to fend off a
"too prolonged" period of low inflation, though for now it
expects inflation to rebound slowly, an ECB policymaker said on
"Should we note a deviation from this path, we will use
every instrument within our mandate, including unconventional
ones, in order to cope effectively with risks of a too prolonged
period of low inflation," European Central Banker Christian
Noyer told a luncheon at the New York Stock Exchange.
His comments largely reflected the message the ECB sent
earlier this month when it opened the door to turning on its
money-printing presses to boost the weak euro zone economy and
inflation. On Saturday, President Mario Draghi flatly said the
central bank would ease policy more if the euro kept
While the ECB aims to keep euro zone inflation close to -
but under - 2 percent, it has been running at just 0.5 percent.
Noyer said the ECB expects a "progressive return" of
inflation to that goal. The central bank also expects to keep
the bloc's key interest rate, now at 0.25 percent, "at present
or lower levels for an extended period of time," he said at a
Paris Europlace forum.
An asset-purchase program, also known as quantitative
easing, is one option available to the ECB, though it was
previously considered highly undesirable by some central bankers
and only to be considered if prices were falling outright.
Policymakers have recently publicly broached the idea of
cutting deposit rates below zero - effectively charging banks
that hold excess cash at the ECB - or embarking on bond
purchases as have the United States, Japan and Britain, if the
threat of deflation became more acute.
(Reporting by Jonathan Spicer; editing by G Crosse and Chizu