FRANKFURT (Reuters) - The European Central Bank is ready to take "decisive action if required" should inflation risk becoming entrenched below the ECB's target of just under 2 percent, Executive Board member Benoit Coeure told a Slovenian newspaper.
The ECB left interest rates unchanged at record lows earlier this month despite inflation slowing to 0.7 percent in January - far below the bank's target of just below 2 percent. The ECB opted to wait until its March meeting to assess more information on the economic picture before deciding whether to take fresh policy action.
"The Governing Council's assumption is that the rate of inflation will gradually increase towards our target of close to, but below, 2 percent," Coeure told Slovenian newspaper Delo. "We are however closer to the area where inflation expectations could be altered and create downside risks to price stability."
"So we are very vigilant regarding risks to our baseline scenario, which envisages inflation slowly going back to 2 percent over the medium term," he added. "We remain firmly determined to maintain the high degree of monetary accommodation that is appropriate for the euro area economy, and will not hesitate to take further decisive action if required."
"Over the next weeks and months, if risks to our main scenario materialize, we will be ready to act, consistent with our forward guidance."
For a full text of the interview, click on:
Writing by Paul Carrel, editing by David Evans