FRANKFURT – The European Central Bank is keeping a close eye on the euro exchange rate and its impact on growth and inflation after the currency gained in value against the dollar and the yen, which fueled expectation the ECB may cut rates to soften the blow.
ECB President Mario Draghi has stressed the exchange rate is not a policy target, but by linking it to growth and prices stability after the ECB's February 7 policy meeting, Draghi achieved a deft piece of verbal intervention, analysts said.
Highlights of ECB policymakers' comments since then may shine some light onto the ECB's current assessment.
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EWALD NOWOTNY (AUSTRIA), FEB 18
"The dollar/euro exchange rate is moving in a range we have had before. We have had no special developments. There is a euro appreciation against the yen but not to a dramatic extent.
JENS WEIDMANN (GERMANY), FEB 16
"In the euro-area it will last a little longer until we come to the turning point. It will not be in the first quarter, like in Germany, but probably ... the second half of the year".
MARIO DRAGHI (PRESIDENT), FEB 15
On currency exchange rates: "All this chatter that has been undertaken in the past few weeks is either inappropriate or fruitless - in all cases it's self defeating."
"The exchange rate is not a policy target, but the exchange rate is important for growth and prices stability.
JENS WEIDMANN (GERMANY), FEB 15
On euro exchange rate: "We will certainly not justify any monetary policy decision with one single factor".
VITOR CONSTANCIO (VICE-PRESIDENT), FEB 14
On negative deposit rate: "It is not clear-cut, it's a possibility.
"We are aware but no decision has been made and as we have said, technically, from the point of view of technicality, we are ready to do it if one day we would decide that but that has not been the case.
EWALD NOWOTNY (AUSTRIA), FEB 13
On euro exchange rates: "They are a sensitive element in economic events, so it is sensible to watch them. But I see no need to act at the moment. One should take the drama out of the whole thing. But if developments become more strongly accentuated then one would have to speak about this.
MARIO DRAGHI (PRESIDENT), FEB 12
On bond purchase program: "The ECB can only consider OMTs if there are major problems in the transmission of monetary policy and if there is strict and effective conditionality attached to an appropriate European Stability Mechanism program."
On euro exchange rate: "I think the term currency wars is way, way over done. We are not witnessing anything like that."
JENS WEIDMANN (GERMANY), FEB 11
"Exchange rate developments are of course considered in monetary policy decisions insofar as they influence price developments. But an exchange rate policy with a targeted weakening of the euro would in the end result in higher inflation.
(Compiled by Frankfurt Newsroom; Editing by Louise Heavens)