Euro strength may have less of an impact than in the past, ECB's Coeure says
(ShareCast News) - Recent strength in the single currency may have less of an impact than in the past but needed to be monitored, a top Europaen Central Bank official said.
In so far as the single currency's appreciation was the result of the ECB's own actions to boost economic activity having the desired effect, then "any disinflationary effect of a stronger currency arising from expectations of a tighter future monetary policy stance might be mitigated, or offset, by the ensuing improvement in the economic outlook," Governing Council member Benoit Coeure said.
Nonetheless, in the same speech delivered in Frankfurt on Monday, Coeure indicated that "exogenous" shocks (as opposed to endogenous forces) to the currency - if sustained - could lead to an unjustified tightening in monetary conditions.
According to Coeure, that, in turn, could have undesirable consequences for the inflation outlook.