The European Central Bank should keep its policy ultra-easy to support the economic recovery in the euro area and insulate its financial markets from higher interest rates in the United States, ECB policymaker Ignazio Visco said.
The ECB will review its policy path next week and align it with its new strategy, which says inflation should be allowed to edge above 2% for some time when interest rates are near their trough as they are now.
With price growth seen well below that level for years to come, Visco said the ECB had to keep borrowing costs low despite some temporary rebounds in inflation.
"Financial conditions are to remain favourable even if we have signs of some price increases that are above the target that the central banks have set," Visco, Italy's central bank governor, said in an interview with Bloomberg TV.
The ECB is on course to buy 1.85 trillion euros worth of bonds under a pandemic-fighting programme due to run at least until March 2022.
With the economy now recovering after last year's virus-induced shock, some of the more conservative policymakers on the ECB's governing council have called for reducing the pace of those purchases.
But Visco warned about the risks of a third wave of coronavirus infections and of a "market shock" coming from across Atlantic, where bond yields have risen along with inflation expectations.
"We have to avoid tapering before the time comes," Visco said. "I don't expect monetary policy to be tightened for a long period."
The ECB has also pledged to keep rates at record lows until inflation heads back to its goal, and to keep buying bonds under its regular Asset Purchase Programme for as long as necessary.