By David Barwick – FRANKFURT (EconoStream) – European Central Bank Governing Council member Pablo Hernandez de Cos on Tuesday reiterated his assertion that the strength of the euro had undone much of the monetary accommodation provided by the ECB.

In an appearance before the Congress of Deputies, the lower house of Spain's legislative branch, de Cos, who heads the Bank of Spain, explicitly raised the possibility that the ECB would need to take further measures.

There is ‘no room for complacency’, he said, given ‘the fragility and heterogeneity of the recovery in the euro area, forecast inflation in the medium term that is well below our target, and an evolution of the nominal effective exchange rate that in recent months has offset a good part of our stimulus’.

Monetary accommodation must remain ‘significant’ until the recovery stands on solids ground, he said.

‘Furthermore, it cannot be ruled out that it is necessary to recalibrate the previous measures, or introduce new ones if necessary, to comply with our mandate of price stability, always understood in a symmetrical way’, he said.

De Cos called the ECB’s pandemic emergency purchase programme (PEPP) ‘clearly successful’ in terms of shoring up financial markets across the euro area. He cited sovereign debt yields, close now to their pre-pandemic levels, ‘but it can also be seen in other market segments, such as that of corporate issuers.’