TOKYO, Dec 4 (Reuters) – The European Central Bank will stick to the G7 communique’s language on exchange rates, Piero Cipollone, a member of its executive board, told the Nikkei newspaper when asked whether it would accept any decision by Japan to conduct currency intervention.
“The G7 communique on exchange rates uses very clear language. It says, among other things, that we are committed to ‘market-determined exchange rates,’ to ‘consult closely in regard to actions in foreign exchange markets’ and that ‘we will not target exchange rates for competitive purposes. We will stick to that,” Cipollone said in the interview published on Thursday.
He made the remark when asked whether the ECB would accept Tokyo’s intervention in the currency market to prop up the weak yen.
Asked about the euro zone’s economy, Cipollone said it had been resilient and the ECB’s “central scenario” for inflation, under which it will dip in 2026 and head back to its 2% target by the end of 2027, seemed “more and more credible”.
Still, he cautioned the ECB might still need to cut interest rates if its expectations for a boost from German fiscal spending and greater consumption by households fail to come true.
“We are assuming that the savings rate will go down, but this assumption has yet to be tested,” Cipollone said. “If it doesn’t materialise, we will need to act.”
(Reporting by Leika Kihara and Francesco Canepa; Editing by Himani Sarkar and Tomasz Janowski)