Sept. 28 (Bloomberg) -- European Central Bank President Jean-Claude Trichet said it is too early to unwind emergency measures to revive economic growth and bank lending.

“It would be premature to declare the crisis over,” Trichet told the European Parliament in Brussels today. “Now is not the time to exit. However, at some point in time an exit strategy will have to be implemented. The ECB has an exit strategy and stands ready to put it into action when the time comes.”

The Frankfurt-based central bank has lowered its benchmark lending rate to a record low of 1 percent to fight Europe’s worst recession since World War II. It is also employing “non- standard measures” to get credit flowing through the economy again, lending banks as much money as they need at the benchmark rate and buying covered bonds.

“The euro-area economy shows signs of stabilization,” Trichet said. “In the period ahead we expect to see a very gradual recovery.”

German government bonds rose after Trichet’s comments. The yield on the 10-year security fell 2 basis points to 3.24 percent as of 3:51 p.m. in London.

The ECB this month predicted economic growth in the 16- nation euro region of about 0.2 percent in 2010, revising a June forecast for a 0.3 percent contraction. In 2009, the economy will shrink about 4.1 percent, less than the 4.6 percent contraction predicted three months earlier.

‘Do Your Job’

The global recession has made banks reluctant to lend and also eroded demand for debt. In Europe, loans to the private sector rose 0.1 percent in August from a year earlier, the slowest growth since records began in 1991, the ECB said last week.

There’s a “gradual improvement in financing conditions which is expected to support demand for credit in the period ahead,” Trichet said. “It is for this reason that the Governing Council continues to regard ECB interest rates as appropriate.”

“Our message to banks is clear: do your job,” he added.

To contact the reporter on this story: Christian Vits in Frankfurt at cvits@bloomberg.net

Last Updated: September 28, 2009 11:45 EDT