PARIS (Reuters) - The European Central Bank (ECB) will keep monetary policy loose for as long as needed and could tweak its next monetary policy steps if the economic situation merits it, said ECB policymaker Francois Villeroy de Galhau on Tuesday.
Although the ECB ended its 2.6 trillion euro ($2.9 trillion)bond purchase scheme at the end of last year, it has put plans to “normalize” policy on hold, delaying a rate hike into next year.
“Depending on the flow of economic data, the timing can be adapted with any necessary flexibility. And the intensity of the various mechanisms should be calibrated with total pragmatism,” said Villeroy, who is also governor of the French central bank.
“In line with its mandate, monetary policy will remain accommodative as long as necessary to reach the medium-term inflation target,” Villeroy added, writing in his annual letter to the French president.
Euro zone inflation has steadily drifted lower in recent months despite rising wages and record high employment, with inflation reaching 1.4 percent in March - well below the ECB’s 2-percent target.
Reporting by Leigh Thomas; Editing by Sudip Kar-Gupta