ECB’s Visco says euro’s strength is a worry

Frankfurt

A recent strengthening in the euro’s exchange rate is a worry and will warrant a reaction from the European Central Bank if it drags inflation farther away from its goal, ECB policymaker Ignazio Visco said yesterday. Visco also denied ECB policymakers were divided on the matter and said his views echoed those of the Executive Board.

“The euro’s recent strengthening is worrying us because it generates further downward pressures on prices at a time when inflation is already low,” Visco, Italy’s central bank governor, told an event in Trento. “The monetary policy implications are obvious: if the downward pressures jeopardize our price stability objective, we’ll have to intervene.

“If, however, opposite effects were to emerge, the measures we’ve already taken could suffice.” The euro hit its highest level since mid-2018 on Sept. 1 at $1.2011, but has since given up half of its gains for the year, closing at $1.1630 on Friday amid a new surge in coronavirus cases in Europe.