Tuesday, 27 Oct 2020

ECB's Visco says euro's strength is a worry

FILE PHOTO: Ignazio Visco, governor of Bank of Italy, speaks during an event to launch the private finance agenda for the 2020 United Nations Climate Change Conference (COP26) at Guildhall in London, Britain, February 27, 2020. Tolga Akmen/Pool via REUTERS/File Photo

FRANKFURT (Reuters) – A recent strengthening in the euro’s exchange rate is a worry and will warrant a reaction from the European Central Bank if it drags inflation farther away from its goal, ECB policymaker Ignazio Visco said on Sunday.

Visco also denied ECB policymakers were divided on the matter and said his views echoed those of the Executive Board.

“The euro’s recent strengthening is worrying us because it generates further downward pressures on prices at a time when inflation is already low,” Visco, Italy’s central bank governor, told an event in Trento.

“The monetary policy implications are obvious: if the downward pressures jeopardise our price stability objective, we’ll have to intervene.

“If, however, opposite effects were to emerge, the measures we’ve already taken could suffice.”

The euro hit its highest level since mid-2018 on Sept. 1 at $1.2011, but has since given up half of its gains for the year, closing at $1.1630 on Friday amid a new surge in coronavirus cases in Europe.

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