Brussels, 07/04/2014 (Agence Europe) - On Monday 7 April, at the final meeting of the European Parliament's economic and monetary affairs committee before the European elections, Vice-President of the European Central Bank Vitor Costancio said that the ECB would take action to achieve its mandate of ensuring inflation remains at a level of around 2%.
In answer to a question from Leonardo Domenici (S&D, Italy), Constancio said: “Everybody was surprised by the very low level of inflation of 0.5% in March. We need to see what happens with inflation in April. We need to see if the scenario has changed and to what degree. The outlook for 2014 was 1%... The situation is of great concern. Any shock could bring it to negative territory as it is the case in some member states (see EUROPE 11053). It has to be addressed and will be addressed. Monetary policy not as efficient as in a normal situation. What is important is unanimity (Ed: on the ECB's Governing Council) on accepting idea of non conventional instruments will be addressed to tackle this situation”.
Corien Wortmann-Kool (EPP, Netherlands) asked whether direct bank recapitalisation by the European stability mechanism might not be needed when the result of bank stress tests by the ECB and the European Banking Authority are published in autumn. Costancio replied: “Now there is bigger appetite for bank assets from the market. With this environment, if it continues, there is a possibility that banks needing capital will only have to refer to the market. That's the situation right now.'
France. Commenting on the budget situation in France that was raised by Swedish Liberal Olle Schmidt (see related article), Costancio said: “We agree that France not long ago made commitments regarding its fiscal policy. It should indeed comply with them. There seems to be a gap, which is not very big and should be filled. It is the choice for the country on how to fill it: cutting expenditure, reducing taxes. It's their choice, but the target should be of course complied with. That's also our view”. (MB)