The European Central Bank would be ready to counter upside inflation risks in the euro zone if financial market turbulence faded away and the bank's main scenario was confirmed, ECB Governing Council member Guy Quaden said today.
"Should financial market tensions persist or intensify, they would affect financing conditions more significantly and eventually economic activity too," Mr Quaden said in a statement on the National Bank of Belgium's Web site ( www.nbb.be).
"These downside risks are, I think, relevant both for the growth and the inflation outlook, as they have the potential to alleviate some of the expected upward pressure on prices of a cyclical nature embedded in the baseline scenario," he said.
"Conversely, should the financial turbulence fade away and the main scenario be confirmed, our monetary policy should be and would be ready to counter possible upside risks to price stability," he said adding uncertainty had increased.
