LONDON (Reuters) - The European Central Bank is looking carefully at forward guidance but it is too early to say whether it will be used more extensively, executive member of the ECB’s executive board Benoît Cœuré told The Times.
The method used by the U.S. Federal Reserve and being considered by Britain’s incoming Bank of England governor involves central banks spelling out in advance future indications for monetary policy.
“The ECB is looking carefully at what has been done elsewhere, in particular the U.S. experience with forward guidance,” Cœuré said in an interview published on Saturday.
“It is too early to say if we are going to take a bigger step in that direction.”
The ECB also needs to be ready to act and consider all possible options if the euro zone economy weakens, Cœuré told the newspaper.
“We have to be ready to cope with more negative scenarios, particularly in an environment of higher global volatility and risk-aversion,” he said, arguing the most likely outcome would be very gradual recovery.
“We will... keep an eye on all possible measures - standard and non-standard - to react if needed.”
Coeuré predicted the euro zone economy will recover gradually, with positive growth expected in the second half of 2013 and picking up in 2014.
But he warned that conditions on the continent were different to those in the United States.
“Economic conditions in the euro area are not in any sense the same as in the US. The economy remains weak.”
Editing by David Cowell