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By Luke Heighton
     FRANKFURT (MNI) - The slowdown in the eurozone economy does not mean it
will slide into a recession, ECB Executive Board member Yves Mersch said in an
interview published Wednesday, while Germany's weak economic performance "is not
sufficient" to prompt a monetary policy response.
     But the unevenly-distributed economic fallout from Brexit is a "concern",
he added, with uncertainty having negative impacts "on all sectors of the
economy and on all countries."
     Here are the key points from his interview with Czech newspaper Hospodarske
noviny:
     --"What is currently happening to the [eurozone] economy is still broadly
in line with our baseline scenario," Mersch said. "We had already anticipated a
slowdown in growth when we announced these baselines. Now that the slowdown is
materializing, we do not have to take it into account for a second time in our
policy response. Fundamentals have not changed but political uncertainty has
increased."
     --Mersch was coy in his response to being asked if - in light of the recent
euro area slowdown - the ECB is reconsidering plans to end quantitative easing.
"If we identify a deviation, we analyse the reasons for it and the impact it is
likely to have on inflation. Let me remind you that our sole objective is to
maintain price stability."
     --The slowdown in the third quarter in Germany "was mainly caused by the
automotive industry," Mersch said, "which was affected by the diesel scandal and
related aspects. But a slowdown in one quarter in one country is not sufficient
to prompt a monetary policy response at the euro area level. We would have to
see whether a slightly deeper slowdown in one quarter might not be followed by a
slightly better performance in the following quarter."
--MNI Frankfurt Bureau; +49-69-720-146; email: luke.heighton@marketnews.com
--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com
[TOPICS: M$E$$$,M$X$$$,M$$EC$]