BERLIN (Reuters) - The European Central Bank stands ready to act if needed to stop euro zone inflation getting stuck at low levels, though any new measures would bring risks that must be carefully assessed, Bundesbank chief Jens Weidmann said.
Weidmann, the leading hawk on the ECB's 24-member Governing Council, played down the possibility of the euro zone slipping into a deflationary spiral but said ECB policymakers were watching price pressures closely.
Last week, the ECB kept its interest rates at record lows but opened the door to turning on its money-printing presses to boost the euro zone economy and keep inflation from staying too low.
"Against the backdrop of low inflation pressure, the expansive bias of monetary policy is appropriate," Weidmann said in the text of a speech for delivery at a German banking conference in Berlin on Tuesday.
"At the same time, I want to stress that the risk evoked by some people of a self-reinforcing deflationary downward spiral from falling wages and prices is also low, despite the euro zone's current very low inflation rates," he added.
Euro zone inflation is running at just 0.5 percent.
Forecasts from ECB staff in March pointed to inflation rising to 1.5 percent in 2016, and hitting 1.7 percent in the final quarter of 2016 - barely meeting the ECB's target of inflation of just below 2 percent over the medium term.
The euro zone's low inflation rates were driven by falling energy prices and the economic adjustment process in some crisis-hit states, Weidmann said, adding that prices should rise further as the recovery gains traction in those countries.
In the expectation of gradually rising inflation rates, the ECB had decided not to further loosen its monetary policy at its meeting last week, Weidmann said.
"But we are following the development (of price pressures) very closely and, if necessary, are ready to take further measures to counter effectively a too prolonged period of low inflation rates," he added.
"At the same time, it must be borne in mind that we would venture into uncharted waters with all the monetary policy measures currently on the table," he said. "Thus, questions arise about the effectiveness of such measures and about the associated risks and knock-on effects."
Weidmann was the only governing council member to vote against the ECB's still-unused OMT bond-buying programme, which he views as a breach of the ECB's prohibition on monetary financing of governments.
(Reporting by Thomas Atkins; Writing by Paul Carrel)