MNI INTERVIEW2: Euro Hurts Exporters, But No ECB Action: Vella

The euro's recent appreciation against the US dollar is making life more difficult for the eurozone's export-led economies, Central Bank
of Malta Governor Mario Vella told MNI in a video interview this week, although he added that the European Central Bank was unlikely to take direct remedial action as it "never" sets monetary policy in reaction to foreign exchange rate moves.

Certainly the ECB never reacts, in terms of its monetary policy decisions, to developments in the exchange rate," the ECB Governing Council member said, but "a strong appreciation for the euro has implications on prices. It makes it more challenging, for sure, especially for those countries which are reliant to a large extent on external trade."

While Vella didn't rule out cutting interest rate cuts deeper into negative territory at a future point, he stuck with the ECB script that any such step hinged on the requirements to underpin the wider economy.

"As for interest rates cuts, at this stage nothing is ruled out -- the president's introductory statement clearly states that they could go lower -- but in the face of the existing shock I don't think there is a belief that it is the most effective tool," he said.