Mersch: Chance has increased of ECB acting to avert deflation

The likelihood of more action by the European Central Bank to avert deflation in the eurozone is increasing, ECB board member Yves Mersch said on Monday. "The probability that the governing council will take action at its next policy meeting in June has increased considerably," Mersch told a conference in Munich. "In view of the currently very subdued price pressures, our key interest rates are at a very low level," he said. At this month's meeting in Brussels, the decision-making body voted to hold its key interest rate steady at its current all-time low of 0.25 percent. But ECB president Mario Draghi gave the strongest hint yet that further easing is on the cards. Mersch agreed. "We assume that interest rates will remain at this level or even lower for a prolonged period. We have other tools available to ease our money policy stance still further," he said. "The ECB governing council is in agreement on the use of both non-standard measures and conventional monetary policy instruments to curtail the risks of inflation remaining very low over too long a period," Mersch said.