MILAN (Reuters) -The European Central Bank (ECB) will keep doing all that is necessary to complete its nearly accomplished mission on inflation, one of its top policymakers, Bundesbank President Joachim Nagel, said on Thursday.
Annual euro zone inflation fell to 1.9% in May, from 2.2% in April, EU statistics office Eurostat said on Wednesday.
Speaking at the Young Factor student conference in Milan to promote financial literacy, ECB Governing Council member Nagel said that bringing euro zone inflation to the 2% target was the best thing the central bank could do to promote economic growth.
“I guess this year we are coming close to our target, 2% on average, that is more or less mission accomplished,” the German central banker said, adding that the ECB has been shown to be good at using a wide range of tools to achieve price stability.
“We are now in the neutral territory of monetary policy,” he said. “So I believe that we are on the right track when it comes to monetary policy. … We will do what is necessary, we did it in the past.”
ECB Vice President Luis de Guindos, at the same conference, said the ECB would stick to a data-dependent, meeting-by-meeting approach to monetary policy given the high level of uncertainty linked to geopolitical developments.
In Milan on Wednesday, ECB policymaker and Bank of Italy Governor Fabio Panetta said the ECB would retain a flexible approach, pointing to forecasts indicating that euro zone inflation would undershoot the ECB’s 2% target for an extended period of time.
Bank of Portugal Governor Mario Centeno said on Wednesday at the student conference that weak economic growth in the euro zone could prevent inflation from hitting the ECB’s target.
However, Nagel stressed that the ECB’s mandate was solely price stability, so it did what it could within that remit, laying the ground for politicians to do the rest.
(Reporting by Valentina Za, editing by Alvise Armellini and Bernadette Baum)
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