FRANKFURT (Reuters) - The European Central Bank discussed the appreciation of the euro at its latest policy meeting due to the downward pressure it puts on inflation, ECB President Christine Lagarde said on Thursday.
The euro has firmed around 8% against the dollar since the spring and 4% against a basket of currencies, eroding the competitiveness of exporters and dampening inflation by making imports cheaper.
“The Governing Council discussed the appreciation of the euro,” Lagarde told a news conference.
“Our mandate is price stability, and clearly to the extent that appreciation of the euro exercises negative pressure on prices, we have to monitor carefully such a matter,” she said.
“But as you know, we do not target the exchange rate,” Lagarde added.
The ECB has long said it has no exchange rate target, but policymakers often grow uneasy when the euro approaches $1.20, which it broke last week.
ECB Chief Economist Philip Lane warned then that this level would be factored into policymaking and would thus have a wider implication for the economy.
Adding to the ECB’s headache, the U.S. Federal Reserve last month tweaked its own inflation target to allow for excess inflation after downturns.
Reporting by Balazs Koranyi; Editing by Catherine Evans and Hugh Lawson
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