MNI BRIEF: EZ Growth Risks Key To ECB Calibrate Policy -De Cos

Downside growth risks in the euro area that could emerge from stronger that expected monetary policy transmission must be closely monitored to calibrate the correct policy response going forward, Bank of Spain Governor Pablo Hernandez de Cos said on Wednesday.

Speaking at the ECB Watchers conference in Frankfurt, de Cos said this planning is especially relevant when his thinking suggests current projections point to a return to the 2% target and that the risks to the inflation are balanced.

“Available empirical evidence might be signaling a stronger transmission to aggregate demand,”de Cos said, noting that the ECB has persistently underestimated employment growth and the labour market resilience that has been key in limiting credit risk from a “forceful and stronger than would be expected” transmission of policy tightening to private sector conditions. MNI speaks to Bundesbank President Joachim Nagel on Friday, when many of these issues will be discussed (INVITATION: MNI Webcast with Bundesbank's Joachim Nagel On Mar 22)