FRANKFURT (AFX) - Bundesbank president Ernst Welteke said the euro exchange rate must be observed "very carefully" for possible dangers to price stability.
In a text for delivery to a German-Swiss chamber of commerce meeting in Zurich, Welteke also stressed the European Central Bank's interest in a strong euro.
"While the outlook for the economy counteracts price increases, the development of the euro currency rate must be observed very carefully given the possible dangers for price stability," Welteke said. "I want to stress here again our great interest in a strong euro," Welteke said. "The external value of the euro is a very important indicator within the framework of the second pillar in the monetary policy strategy," he added.
Welteke is a member of the governing council of the ECB. He said the markets share the ECB's medium-term price expectations, and low long-term inflation expectations are reflected in the current low rates in the capital markets.
"After all factors have been considered and given the medium-term orientation of the monetary policy, I've come to the conclusion that the current monetary policy course is appropriate from the present standpoint," he said. "Interest rates do not stand in the way of economic recovery."
Welteke said when adjusted for distortions, the monetary growth rate now is lower and "not expansive".
"It signals no price risks in the medium term," he added. He said when the second pillar of the ECB monetary strategy is assessed, other price relevant indicators show an easing in price pressures.
"The economic pace in the euro area has slowed down distinctly in recent months," he said.