What the European Central Bank will do at its next monetary policy meeting is a decision yet to be made, ECB Executive Board member Yves Mersch said Wednesday.
During a podium discussion at a conference in the German capital, Mersch said the Governing Council had “various possibilities” at its disposal.
Some of these were still being worked on, while others were more readily deployable, he said.
“Just what will happen” is a decision that the ECB will only make at the meeting, he said. “There are several possibilities and we are working with high pressure” on preparations.
“We never pre-commit unconditionally,” he said.
Asked about the exchange rate, Mersch repeated the ECB mantra that this is no target and would not become one.
However, he noted, the exchange rate does have a significant impact on current inflation rates in the euro area.
“Our interest is in keeping the inflation expectations anchored,” he said. Should these dis-anchor, the price paid for such a development would be “very high, and we want to prevent that.”
“Beyond that, the exchange rate is naturally one of the elements that” are relevant for the ECB, he said.
The strong euro implies higher purchasing power on one hand and a reduction in competitiveness on the other, “but that is not one of our goals,” he said.
“We believe that this goal of price stability is the best precondition for sustained growth,” he said. “We can only act within our mandate, which is price stability.”