ECB Officials Ready to Add Stimulus But Won’t Say When or How

(Bloomberg) -- European Central Bank policy makers reiterated their readiness to add monetary stimulus for the euro zone, but signaled they’re not yet united on when or how to act.

Executive Board member Benoit Coeure said in remarks broadcast Monday that loose policy is needed now “more than ever” and interest-rate cuts and quantitative easing are both on the table. Bank of France Governor Francois Villeroy de Galhau said the ECB has the “determination” to act but noted mixed readings on the economy and suggested there’s no need to rush into a decision this month.

“We have several Governing Councils to come in the next months,” Villeroy said in a CNBC interview. “If and when needed, there must be no doubt about our determination to act and our capacity to act. I repeat, if and when needed.”

Economic reports on Monday showed how there are silver linings amid the euro zone’s slowdown, as German industrial production saw a slight pick-up in May. At the same time, the Bank of France cut its growth estimate for the second quarter and said confidence among manufacturing executives has dropped to its lowest level in six years.

The euro area has been cooling for more than a year, driven by global trade tensions and political uncertainties that have especially weighed on manufacturers. Another Governing Council member, Bank of Finland Governor Olli Rehn, said last week that the slump should no longer be considered a “temporary dip” and that ECB has a number of instruments available for support.

Coeure, who is in charge of market operations and was a driving force behind QE, shared that view in his comments in an interview this weekend in Aix-en-Provence, France.

“We have piloting expectations for monetary policy -- forward guidance; we have rates which are very low and we said we are ready to cut them even more if necessary -- I always add if necessary; and we have a presence on financial markets with reinvestment of our portfolio of assets,” he said on BFM Business Radio. “We could hypothetically restart net asset purchases again if circumstances make it necessary.’’

IMF Job

Coeure also took the opportunity to rule himself out of the race to lead the International Monetary Fund when Christine Lagarde succeeds Mario Draghi as ECB president in November. European governments are actively discussing nominating Bank of England Governor Mark Carney as the next head, a person familiar with the matter said last week.

“My specialty is Europe, so I’d rather remain in Europe and continue to serve Europe; we’ll see how but there are different ways of doing it,” said Coeure, whose ECB term ends in December. “There are all sort of good candidates” for the IMF.

--With assistance from Alan Katz.

To contact the reporters on this story: Carolynn Look in Frankfurt at clook4@bloomberg.net;William Horobin in Paris at whorobin@bloomberg.net

To contact the editor responsible for this story: Paul Gordon at pgordon6@bloomberg.net

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