By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Emmanuel Moulin said on Friday that the ECB was taking a measured approach to monetary policy given that inflation was largely driven by imported energy costs, with no significant spillovers to underlying prices or wages so far.

“In the current situation, with inflation being largely imported, the ECB is adopting a measured approach,” Moulin, who heads the Banque de France, told French newspaper La Montagne in an interview.

Moulin noted that euro area inflation had reached 3.8%, above the ECB’s 2% target, largely due to rising energy prices stemming from the conflict in the Middle East.

However, prices excluding energy and fresh produce remained relatively stable, while there was no evidence of spillover effects on wages at this stage, he said.

The ECB had raised its key interest rates twice, in June and September, before leaving them unchanged at its October meeting, he noted.

“We continue to monitor the inflation situation very closely and will act based on the data available to us at our future meetings,” he said.

Turning to France’s fiscal situation, Moulin rejected suggestions that the ECB could intervene to address the country’s debt problems.

“It is not part of the ECB’s mission to resolve the budgetary problems of states,” he said.

France needed to address its fiscal challenges domestically, particularly by adopting a budget that reduced the deficit and reassured investors about the country’s fiscal trajectory, he said.

Moulin also warned against proposals to cancel French government debt held by the Banque de France, saying such a move would create a hole of nearly €500 billion in its balance sheet and undermine confidence in the country.

“This would put the Bank of France in difficulty, but also the entire Eurozone and the financial sector, without any benefit to public finances since the Bank of France belongs to the State,” he said.