The European Central Bank's bond purchases in debt markets should be subject to strict conditionality, Executive Board member Benoit Coeure said Friday.
The conditionality should be based on an official request for support from the bailout funds EFSF and ESM, he added.
Liquidity provisions will not dislodge inflation expectations, Coeure said in Frankfurt yesterday.
"Looking at the developments in market-based measures of medium to long-term inflation expectations in the euro area during the crisis, inflation expectations seem to be well-anchored in spite of market turbulence and uncertainties regarding future developments," Coeure said according to a text published by the ECB on Friday.
The anchoring of expectations at low levels suggests continued negative output gaps in the euro area as well as confidence that the central bank will drain liquidity if and when necessary to control inflation, he added.
Coeure says the euro area financial crisis has not eroded trust in the euro as a currency.
by RTT Staff Writer
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