ECB Could Increase Stimulus Again If Needed, Villeroy Says
Central bank is ready to act if economic slowdown worsens.
(Bloomberg) -- The European Central Bank could intensify stimulus if the euro area shows more signs of weakness, but can’t resolve the trade tensions that are the number one threat to the economy, Governing Council Francois Villeroy de Galhau says.
‘We will do everything within our mandate. If the economy slams on the brakes, we could do more,” the Bank of France governor said Wednesday on television station CNEWS. “But we don’t have a miraculous medicine, we can’t do everything.”
Villeroy’s comments echo his colleagues at the ECB after a meeting last week when the central bank pledged to keep interest rates at record lows for longer and discussed reactivating asset purchase programs if needed. With scant signs of a recovery in manufacturing, the trigger could come if policy makers see that weakness spreading to the broader economy.
Villeroy, who is a contender to take over from ECB President Mario Draghi in November, also stressed the central bank’s limits. He said the onus is on political leaders, particularly U.S. President Donald Trump, to end the trade tensions that are hurting confidence and growth around the world. Central banks, meanwhile, can only “attenuate” the consequences, he said.
Villeroy said he would be ready to do “whatever it takes” to save the euro, but noted that the conditions are not the same as when Draghi made that statement in 2012.
“Today the danger isn’t a euro crisis,” Villeroy said. “Today there is a threat to the global economy.”
To contact the reporter on this story: William Horobin in Paris at whorobin@bloomberg.net
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Catherine Bosley
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