April 30 (Bloomberg) -- European Central Bank President Jean-Claude Trichet has imposed a vow of silence on Governing Council members as they struggle to agree on what to do next to rescue the economy from recession.

Trichet asked council members last week to refrain from commenting on what new measures the ECB will unveil at its next policy meeting on May 7. Austria’s Ewald Nowotny confirmed the ban today, telling reporters in Vienna officials had been asked “in the name of the President not to talk about details before the May meeting.” Trichet said on April 27 that council members had agreed “not to give any further indications.”

The council is divided over how low to cut the benchmark interest rate, currently at 1.25 percent, and what new tools to use to stem Europe’s worst recession since World War II. The discord forced Trichet to cut rates less than economists expected in April and delay a decision on new measures till May.

Germany’s Axel Weber wants to make 1 percent the floor for the benchmark and is against buying debt to pump additional money into the economy, while others such as Athanasios Orphanides of Cyprus don’t want to rule out deeper cuts or the possibility of asset purchases.

Nowotny, in an April 8 interview, described asset purchases as “sensible” and said the debate on how low to take the key rate was still open, while agreeing with Weber it shouldn’t drop below 1 percent. Several council members have also said one non- standard measure they favor is offering banks longer-term loans to ease credit tensions.

Cacophony of Confusion

“Council members probably realized that they have to discuss measures first among themselves,” said David Milleker, chief economist at Union Investment GmbH in Frankfurt. “They’ve created more confusion than clarity. The entire cacophony didn’t exactly give the picture of a united council in any case.”

Since the ECB’s mid-month meeting on April 23, only Executive Board members Lorenzo Bini Smaghi and Juergen Stark have commented on the specifics of possible new measures. The ECB’s traditional “purdah period” starts today. It requires that officials refrain from commenting on monetary policy in the week before a rate-setting meeting.

The U.S. Federal Reserve, the Bank of Japan and Bank of England have already lowered lending rates to near zero and are buying government and corporate debt to bolster their economies. The Bank of Canada earlier this month cut its main rate to 0.25 percent and said it plans to leave it there for more than a year.

While Trichet has signaled that another quarter-point reduction in the main rate is likely next month, he has declined to comment on what other steps the bank may take.

To contact the reporter on this story: Simone Meier in Frankfurt at smeier@bloomberg.net

Last Updated: April 30, 2009 06:38 EDT