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ECB to act if needed to support euro area, says Bank of France governor

Paris

THE European Central Bank (ECB) has the determination and capacity to act as needed to support the euro-area economy, Bank of France governor Francois Villeroy de Galhau said.

Asked about quantitative easing, Mr Villeroy said in a CNBC interview that any action would depend on the economic data over the next few months.

There is a "continuing slowdown" in the economy along with "significant" wage increases in the euro area and job creation on both sides of the Atlantic, he pointed out. He also said monetary policy "cannot do everything" and politicians must take action to reduce uncertainty.

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Economists are predicting an ECB interest rate cut as soon as this month, though Mr Villeroy indicated he doesn't see a need to rush to action. "We have several governing councils to come in the next months," he noted. "If and when needed, there must be no doubt about our determination to act and our capacity to act. I repeat, if and when needed."

On Monday, the Bank of France said French manufacturing sentiment fell sharply in June and cut its estimate for second-quarter economic growth. Germany reported a modest increase in industrial production.

Current ECB president Mario Draghi will preside over governing council meetings until his term ends on Oct. 31. Christine Lagarde, head of the International Monetary Fund, has been nominated to succeed him.

"Christine Lagarde, after Jean-Claude Trichet, after Mario Draghi, will be a great president for the ECB and she will have my full support in the governing council," Mr Villeroy added. BLOOMBERG