ECB to monitor euro appreciation 'very carefully': Lagarde

FILE PHOTO: European Central Bank President Christine Lagarde looks on during a debate on the 2018 annual report of the ECB, at the European Parliament in Strasbourg, France, February 11, 2020. REUTERS/Vincent Kessler/File Photo

FRANKFURT (Reuters) - The European Central Bank will keep a close eye on the strength of the euro as it tends to push down prices and thereby inflation in the single-currency bloc, ECB President Christine Lagarde said on Thursday.

“We do not target the exchange rate, but clearly exchange rates and particularly the appreciation of the euro play an important role and exercise downward pressure on prices. So we will monitor it, we will continue to monitor it very carefully going forward,” she told the bank’s post-policy meeting news conference.

The ECB has so far said simply that it would monitor developments in the exchange rate as the euro scaled new 2-1/2 year highs against the U.S. dollar at $1.2177.

Analysts expect further dollar depreciation as U.S. fiscal and monetary policies remain easy while the global economy recovers, leading investors to ditch safe-haven U.S. Treasuries for higher-yielding assets around the world.

Reporting by Francesco Canepa; Editing by Hugh Lawson