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Euro strength may be smaller growth drag than in the past - ECB's Coeure

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Euro strength may be smaller growth drag than in the past - ECB's Coeure

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FRANKFURT (Reuters) – Improved euro zone growth can offset some of the negative effects of the euro’s strength but a persistent exchange rate shock could drag down inflation, European Central Bank board member Benoit Coeure said on Monday. Coeure added that given the persistent challenges faced by the ECB in raising consumer prices, its definition of ‘medium-term’, the time horizon required to meet its inflation target, will be longer than usual. “With the current recovery in the euro area being largely driven by domestic demand, euro strength may also have less of an impact on growth than, for example, after the Great Financial Crisis,” Coeure said at a conference in Frankfurt. But he added: “Exogenous shocks to the exchange rate, if persistent, can lead to an unwarranted tightening of financial conditions with undesirable consequences for the inflation outlook.”

(Reporting by Balazs Koranyi; Editing by Gareth Jones)
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