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UPDATE 1-ECB ready to "do more if appropriate" - Villeroy

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PARIS, Sept 11 (Reuters) - The European Central Bank can do more if warranted, ECB policymaker Francois Villeroy de Galhau said on Friday, adding that exchange rates matter for monetary policy.

After a regular policy meeting on Thursday, ECB President Christine Lagarde took a modestly upbeat view on Europe’s recovery from a historic recession and played down concerns about the euro’s strength, disappointing hopes that she would signal more stimulus.

With inflation still subdued, Villeroy said that the ECB would maintain its accommodative monetary policy as long as necessary and go further if required.

“We keep all our options open, and we will be ready to do more if appropriate,” he said in a speech to the Eurofi financial conference in Berlin.

The recent strength of the euro has fuelled expectations that ECB may have to take further action as it weakens both growth and inflation.

Lagarde said on Thursday the bank would monitor exchange rate movements carefully.

Villeroy said: “We don’t target exchange rates. But obviously the exchange rate does matter for inflation and monetary policy.

“And accordingly we will carefully monitor developments in the exchange rate, with regard to its implications for the medium-term inflation outlook.”

Reporting by Leigh Thomas; Editing by Kevin Liffey

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