By Marja Novak
DUBROVNIK Croatia (Reuters) - There is no need for the European Central Bank to launch large-scale asset purchases for now because the euro zone is not in deflation, one of its top policymakers said on Friday.
Speaking to reporters on the sidelines of a conference in Dubrovnik, ECB Executive Board member Benoit Coeure said the ECB would now assess the effect of the interest rate cuts and other measures to spur lending that it took at its June meeting.
"Our priority today is not to reflect on what we will do next," Coeure told reporters. "It's way too early to discuss our next decisions. We are … assessing the impact of the decisions we've taken last week."
The ECB became the first major central bank to introduce negative deposit rates - charging banks to park their funds at the central bank overnight. It also launched ultra-cheap four-year loans to boost lending to companies.
Coeure told the conference earlier that if all goes as expected, credit supply in the euro zone, which was crucial for the euro zone recovery, would bottom out soon.
"We want this recovery to be sustained, we want growth to run forward. We need credit to be extended to the economy and we are not yet there," Coeure said.
"If credit develops as we expect it to develop, we will soon face the bottom ... on the supply side of the credit market."
As part of its stimulus package, the ECB will offer banks ultra-cheap four-year loans conditional on their lending, for instance to the small and medium-sized firms that are the 18-country euro zone's economic backbone.
ECB President Mario Draghi said after the rate-setting meeting that the bank could act again if needed, whetting the markets' appetite for more action. A major asset-buying plan, or quantitative easing, is seen as the only option left for the ECB.
Coeure said QE was part of the ECB's box of tools, which would have to be considered in case the euro zone continued to face a too prolonged period of low inflation.
"The picture is very clear," Coeure said. "It (quantitative easing) is not needed now, because we do not see deflation in the euro zone and we have a deep sense that the measures we decided last week are appropriate to face the prospects of low inflation that we are facing today."
"We would be ready to act if the action last week would not be effective in pushing inflation back (towards our target)."
Coeure added that if the euro zone was still facing an extended period of low inflation later on, "then we would stand ready to do more, but that's really not a discussion that we are having today".
(Reporting by Marja Novak; writing by Eva Taylor; Editing by Kevin Liffey and Hugh Lawson)