KRAKOW Poland (Reuters) - The European Central Bank is working on many policy instruments ahead of its June policy meeting, ECB Executive Board member Yves Mersch said on Thursday.
ECB President Mario Draghi flagged last week that the Governing Council might decide on fresh policy action at its June meeting if the ECB's staff inflation forecasts deteriorated from its last update in March.
Mersch told reporters on the sidelines of a conference in Krakow that he was in favour of speeding up preparations so that the central bank had its instruments ready. Which ones they were would become clear after the June meeting, he said.
"We are working on many instruments," Mersch said. "We are working on a broader range of instruments than might strike a journalist, or even an analyst."
Reuters reported on Wednesday, citing five sources, the ECB was preparing a package of policy options for its June meeting, including cuts in all its interest rates and targeted measures aimed at boosting lending to small- and mid-sized firms (SMEs).
One of the sources told Reuters that a June rate cut was "more or less a done deal". Asked whether this was the case, Mersch said: "We will do our analysis. I hope we are flexible and then get our conclusion."
Shortly before the numbers for euro zone first-quarter economic growth were released, Mersch said: "We are still broadly in line with our forecast of a fragile recovery."
Data then showed euro zone economic growth was much weaker than expected in the first quarter and inflation remained stuck below 1 percent in April at 0.7 percent, a modest pick-up from the previous month.
(Reporting by Karolina Slowikowska in Krakow, writing by Eva Taylor)