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Risks growing that could alter ECB’s tightening plan: Villeroy

Risks growing that could alter ECB's tightening plan: Villeroy© Reuters. Francois Villeroy de Galhau arrives at the Petruzzelli Theatre during a G7 for Financial ministers in the southern Italian city of Bari

NEW YORK (Reuters) – The European Central Bank would have to alter its march toward a more normal policy stance if growing risks from protectionism, exchange rates or market swings end up depressing inflation, ECB policymaker Francois Villeroy de Galhau said on Wednesday.

“We should pay close attention to a possible cumulative risks scenario, the likelihood of which has increased recently: an adverse loop of protectionist threats, unfavorable exchange rate movements, and abrupt financial markets corrections,” he said in New York.

“Such a negative loop would tighten financial conditions, and deteriorate the growth outlook in the euro zone,” Villeroy added in a speech. “Our monetary policy stance would then have to be adapted, depending on the ultimate impact on inflation prospects.”

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Source: Investing.com

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