Frankfurt, Germany / Tokyo, Japan – The European Central Bank (ECB) has reiterated its adherence to the G7 communique’s stance on foreign exchange (FX) policy, according to ECB Executive Board member Piero Cipollone. Speaking to the Nikkei newspaper, Cipollone clarified that the ECB would maintain its market-oriented approach to currency valuation and would not accept unilateral interventions by other nations, including Japan, aimed at influencing exchange rates.

“The G7 communique on exchange rates uses very clear language. It says, among other things, that we are committed to ‘market-determined exchange rates,’ to ‘consult closely in regard to actions in foreign exchange markets,’ and that ‘we will not target exchange rates for competitive purposes. We will stick to that,’” Cipollone emphasized in the interview published Thursday.

This statement comes amid ongoing discussions about potential Japanese interventions to support the weakening yen. Analysts have closely monitored the euro-yen exchange rate, particularly in light of global currency market volatility, and Cipollone’s comments signal that the ECB expects Japan to coordinate with international partners rather than act unilaterally.

Eurozone Economy Shows Resilience, Inflation Outlook Improves

Cipollone also provided an update on the eurozone economy, highlighting its continued resilience in the face of global economic challenges. He noted that the ECB’s central inflation scenario, which forecasts a gradual decline in inflation through 2026 and a return to the 2% target by the end of 2027, is increasingly credible.

However, he cautioned that the ECB may still need to consider interest rate cuts if expected economic boosts—from German fiscal spending and increased household consumption—fail to materialize. “We are assuming that the savings rate will go down, but this assumption has yet to be tested,” Cipollone explained. “If it doesn’t materialize, we will need to act.”

Market Implications

Cipollone’s remarks are likely to influence currency traders, investors, and policymakers, as the ECB’s stance reinforces its commitment to coordinated international action in the FX market. While the ECB maintains a steady approach to interest rates, financial markets remain alert to signals regarding potential interventions, inflation trends, and fiscal policies across the eurozone and G7 nations.