TOKYO, July 2 - European Central Bank (ECB) board member Tommaso Padoa-Schioppa said on Wednesday there were no signs of deflation in the euro zone but that the bank would act if such a trend emerged. "We have no signs of deflation in the euro area," he told reporters after arriving in Japan to meet central bank and government officials. "But the ECB knows well that deflation is a very undesirable condition of the economy and that it is very important to be ready to act against it if it occurs."
Inflation in the euro zone fell to 1.9 percent in May, the lowest in a year. Padoa-Schioppa also said that businesses in the euro zone needed to learn to handle fluctuations in foreign exchange rates, shrugging off suggestions that ECB officials should act more aggressively to help the region's exporters. "The euro economies and business communities...(must) learn to operate successfully in an environment in which exchange rates are or may be subject to rather long upwards or downwards movements determined by the market," he said. Padoa-Schioppa is due to meet Bank of Japan Governor Toshihiko Fukui and Economics and Financial Services Minister Heizo Takenaka during his stay in Tokyo.//