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ECB's Vasle urges structural, fiscal action in euro zone

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LJUBLJANA (Reuters) – Euro zone countries should introduce structural and fiscal measures that would improve their growth potential, ECB Governing Council member Bostjan Vasle said on Friday.

“Euro zone countries still have room for taking on new debt in line with the rules of the Stability and Growth Pact,” Vasle said in a statement.

He said the key aim of the ECB after its Thursday monetary session remains to establish financial conditions that would increase economic activity and lead to inflation moving closer to the ECB inflation goal. This is to bring inflation close to 2% even amid worsening economic conditions.

In September euro zone inflation reached 0.8% year-on-year, which is the lowest growth of prices since 2016, added Vasle, who is also the governor of the Bank of Slovenia.

He pointed out that companies in the euro zone continue to report falls of orders and production in the second half of this year while activity in construction and household spending remains robust.

“We need more time to fully assess the success of the ECB monetary policy package enforced in September whose purpose is to loosen conditions of financing and consequently increase the economic activity and revive price rise,” Vasle said.

The ECB September package includes a restart of bond purchases at a pace of 20 billion euros ($22.24 billion) per month from November.

($1 = 0.8994 euros)

(Reporting By Marja Novak; Editing by Catherine Evans and Frances Kerry)

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