The exchange rate is not a policy target for the ECB; however, it matters for price stability and growth and, as such, it is part of the overall assessment of the appropriateness of the policy stance. If contrary to the objective of medium term price stability, it may thus trigger offsetting policy actions.
An important aspect of the consequences of an exchange rate movement resulting from a monetary policy shock abroad is that it brings about few trade-offs for domestic monetary policy-makers. Currency appreciation would tend to have effects of the same sign on inflation and growth. However, exchange rate movements reflecting other forces, particularly those resulting in severe misalignments, would not have such benign consequences.