© Bloomberg. A pedestrian wears a protective face mask near the European Central Bank (ECB) headquarters in Frankfurt, Germany, on Wednesday, April 29, 2020. The ECB’s response to the coronavirus has calmed markets while setting it on a path that could test its commitment to the mission to keep prices stable. Photographer: Alex Kraus/Bloomberg


(Bloomberg) — Significant monetary stimulus should stay in place and steps to boost it further shouldn’t be discounted if they become necessary, European Central Bank Governing Council member Pablo Hernandez de Cos said.

Inflation foreseen to be well below the ECB’s target and recent exchange-rate moves mean there is “no room for complacency,” Hernandez de Cos said in an article in Spain’s La Razon newspaper. It’s also “crucial” to stay flexible in the execution of asset purchase programs to avoid problems of financial “fragmentation,” he said.

With his call for the need to be flexible, the Bank of Spain governor joins other ECB officials making the case for more action should it be needed. Executive Board Member Fabio Panetta said in a Sept. 22 speech that policy makers should err on the side of doing more to keep the rebound on track.

Hernandez de Cos warned that Spain’s economic recovery from the impact of Covid-19 is still partial and fragile. He said some government support programs for the economy should remain in place in a selective and focused way.

He said the authorities should monitor credit risk closely. In Spain there is still room for more consolidation in the banking industry, Hernandez de Cos said.

©2020 Bloomberg L.P.

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