January 16, 2018 / 2:14 PM / a year ago

ECB's Villeroy says must monitor impact of euro's rise on inflation

PARIS (Reuters) - The European Central Bank must keep an eye on the euro exchange rate because of the downward pressure it puts on inflation, ECB governing council member Francois Villeroy de Galhau said in an interview published on Tuesday.

Villeroy told German newspaper Boersen Zeitung that ECB remained confident that euro zone inflation was moving towards its target of close to two percent even though underlying inflation has held steady for three months at 0.9 percent.

“The only question is how long it will take to meet our target. On this issue, the recent evolution of the exchange rate is a source of uncertainty which requires monitoring with regard to its possible downward effects on imported prices,” Villeroy said.

The euro has risen more than 15 percent against the dollar in the last year, which makes imports of goods like oil cheaper in the euro zone with the effect of weighing on inflation.

Reporting by Michel Rose and Leigh Thomas

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