STUTTGART, Germany (Reuters) - The European Central Bank stands ready to act if price pressures rise, ECB policymaker Joerg Asmussen said on Wednesday, but added there were currently no signs of this happening in the euro zone.
The ECB Governing Council decided unanimously last week to leave the euro zone benchmark interest rate unchanged at 0.75 percent, pointing to signs of stabilization in financial markets but a still weak economic recovery.
Asmussen, a member of the ECB’s Executive Board, said it expects a “mild recession” in the euro zone this year, but added that there was no threat of a recession in Germany.
“We see no inflationary pressure today, but rest assured that if we see signs of increased inflationary pressure, we will act immediately,” Asmussen said during a speech at the University of Hohenheim.
The ECB under President Mario Draghi has already gone further than under its previous chief, Jean-Claude Trichet.
It has cut interest rates below 1 percent for the first time, pumped more than 1 trillion euros ($1.3 trillion) of ultra cheap three-year loans into the banking system and in September announced a new and potentially unlimited bond-buying program which has yet to be tapped.
Asmussen said the ECB had taken on a more prominent role in solving the bloc’s sovereign debt crisis, mainly because it had at the time been the only institution that was in a position to act swiftly, but he stressed that this was not normal.
“It’s about strengthening other European institutions for the future,” Asmussen said. “One has to be careful not to overstretch the (ECB‘s) mandate, because overstretching leads to a loss of credibility,” Asmussen said.
He spoke after Germany’s economy ministry urged the ECB to get back to its price stability mandate as soon as possible after its extraordinary measures to tackle the euro zone’s troubles.
Asmussen did not refer to the German government’s comments and was not asked about them.
Reporting by Eva Kuehnen and Ilona Wissenbach, editing by Annika Breidthardt/Ruth Pitchford