June 28, 2019 / 2:56 PM / 25 days ago

ECB's active policy justified given low inflation, risks, Villeroy says

FILE PHOTO: Francois Villeroy de Galhau, governor of the Bank of France, attends a seminar on financial innovation on the sidelines of a G-20 finance ministers and central bank governors meeting in Fukuoka, Japan, on Saturday, June 8, 2019. Kiyoshi Ota/Pool via REUTERS/File Photo

BERLIN (Reuters) - The inflation rate in the euro zone remains too low, and that justifies maintaining an active monetary policy, European Central Bank policymaker Francois Villeroy de Galhau told a business conference in Germany on Friday.

The Bank of France governor also said the ECB’s decision earlier this month not to raise interest rates in the coming year and to open the door to cutting rates or buying more bonds was warranted given the many uncertainties facing the economy.

“Today the inflation rate is too low -– at 1.2% – compared to our target of 2%, and too much uncertainty remains for the future,” Villeroy said. “This is why we are maintaining an active monetary policy, with very favorable financing conditions for companies in the euro area.

“At the same time, we must nevertheless closely monitor debt developments, including business and household debt: fortunately, debt as a percentage of GDP has fallen since 2014 in the euro area.”

Reporting by Joseph Nasr, editing by Larry King

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