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European Central Bank can act further if slowdown worsens - Villeroy

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European Central Bank can act further if slowdown worsens - Villeroy
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PARIS (Reuters) – The European Central Bank is prepared to act further if the current economic downturn takes a turn for the worse even though central banks cannot alone do everything to keep economies strong, said ECB policymaker Francois Villeroy de Galhau.

Villeroy, who is also governor of the Bank of France, said that uncertainty over trade tensions between the United States and China was the biggest threat to the global economy.

As long as inflation falls short of the ECB’s target, it must keep monetary policy “active and accommodative” as long as necessary, Villeroy said.

“If the current slowdown becomes a real slamming of the brakes, we can do more than we are doing currently,” Villeroy told French television channel CNews on Wednesday.

He added, however, that it was up to politicians to resolve the uncertainty created by trade tensions and that central banks could not do everything to keep economic growth strong.

“They can temporarily attenuate the consequences of a weaker global economy, but they cannot take care of the cause,” he said.

(Reporting by Leigh Thomas and Yann Le Guernigou; Editing by Sudip Kar-Gupta)

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