Trichet Says ECB Monetary Policy Remains Accommodative
European Central Bank President Jean- Claude Trichet comments on monetary policy, economic development, inflation and the region’s fiscal crisis.
He made the remarks in Frankfurt today after the ECB left the benchmark lending rate unchanged at 1.5 percent.
On Japanese intervention in foreign-exchange market:
“We have a very, very clear position in the Governing Council of the ECB. We consider that such interventions have to be made on the basis on multilateral consensus and a multilateral decision. What has been done has not been part of a multilateral decision.”
On bond-buying program:
“We were not unanimous but with overwhelming majority with regards to the bond purchases.”
“I never said myself it was dormant. I always said we were totally transparent about what we were doing.”
“It is an ongoing program and you will see and we are totally transparent.”
“All the non-standard measures without any exception are totally independent.”
“Standard measures are designed to deliver price stability.”
“I never said the SMP had been interrupted; you will see what we do.”
“We discuss the SMP at every policy meeting.”
“You will see what we do; it’s as simple as that.”
“What is absolutely fundamental for the Governing Council of the ECB -- we are responsible for delivering price stability for 332 million fellow citizens.”
On the U.S.:
“I had no doubt a solution would be found. It underlines that all, absolutely all, industrial economies have their own problems.”
“The entire world is intertwined. What happens in the U.S. has an influence on the rest of the world.”
On Ireland:
The Irish adjustment is “going in the right direction.”
On European financial markets:
“We have observed in the last days tendencies to see this kind of liquidity issue which combines a high level of liquidity with absence of smooth market functioning, which is why we have taken the decisions I have just mentioned.”
“I wouldn’t be surprised that before the end of this teleconference you would see something on the market.”
“We are fully transparent.”
“We do what we judge appropriate.”
“We consider that it is essential particularly in the single currency area that strong, rigorous surveillance is of the essence.”
“We always withdraw the liquidity we injected so that we don’t embark on any concept of quantitative easing.”
“If we intervene, we intervene and you see what we do.”
“I will not give any more information on that.”
On the European Financial Stability Facility:
The EFSF “should be operational in our view as soon as possible.”
“It is a decision which I have accepted on behalf of the Governing Council, when the EFSF intervenes in secondary markets it will be on the basis of ECB analysis.”
“What we expect is that the EFSF will be effective and efficient in its interventions which would permit us not to intervene to restore” the transmission channel.
On the economy:
“The first quarter was exceptionally buoyant.”
“We will see what happens for the third quarter
“It’s true we are in a period of uncertainty, not just in the euro area but at the global level.”
“For the third quarter, all the information I have are confirming ongoing growth.”
“In the present moment, let’s wait to make a further judgment at the next meeting when we have the new projections.”
On the dollar:
“I have no other comment than the usual comment, according to which a solid dollar, a dollar which is credible, a strong dollar, to take the words of the U.S. authorities, is good for the U.S. and the rest of the world.”
On governments’ crisis-fighting efforts:
“It goes without saying that the governments have to do their job. It is absolutely fundamental.”
“All depends on the governments being ahead of the curve. Full stop.”
“What is the first in the sequence of action is governments ahead of the curve both with fiscal policies and structural reforms.”
“The governments have their own responsibilities which are very, very, very numerous.”
“We have observed very carefully what had been decided in the last meetings” of European heads of state and government.
“We trust that the signature of 17 heads will be honored fully, rapidly, effectively. That’s the working assumption of the Governing Council of the ECB.”
“Of particular importance is the commitment to deliver on their fiscal policy.”
On Italy:
“We consider that all countries have permanently to be ahead of the curve. That’s true for Italy and all others.”
“The hampering of the Italian economy by impediments is absolutely obvious.”
On monetary policy:
“We were unanimous on monetary-policy standard measures. We were unanimous on the overall full allotment and all the decisions” concerning that.
“We were not unanimous but with overwhelming majority with regards to the bond purchases.”
“The decision we took on the monetary policy was unanimous.”
“We are never pre-committed. We do what we judge is appropriate to deliver price stability.”
“An adjustment of accommodative policy stance was warranted.”
“Our monetary-policy stance remains accommodative.”
“We will continue to monitor very closely all developments.”
On macroeconomic imbalances:
“The Governing Council also welcomes the renewed commitment of all member states to improve competitiveness and address macroeconomic imbalances. Indeed, substantial and comprehensive structural reforms need to be implemented in the countries of the euro area in order to increase the flexibility of their economies and their longer-term growth potential. The removal of labor-market rigidities and the implementation of measures which enhance wage flexibility, notably the elimination of automatic wage-indexation clauses, are of key importance.”
“On the one hand, consumer and business confidence, together with improvements in labor-market conditions, could continue to provide support to domestic economic activity. On the other hand, downside risks may have intensified. They relate to the ongoing tensions in some segments of the euro-area financial markets as well as to global developments, and the potential for these pressures to spill over into the euro-area real economy. Downside risks also relate to further increases in energy prices, protectionist pressures and the possibility of a disorderly correction of global imbalances.”
On inflation:
Inflation risks “remain on the upside.”
It “remains of paramount importance that the rise in inflation doesn’t translate into second-round effects.”
“Relatively high inflation rates seen over the past months largely reflect higher energy and commodity prices.”
“Inflation expectations must remain firmly anchored, in line with the Governing Council’s aim.”
On the economy:
“Continued moderate expansion is expected in the period ahead, however uncertainty is particularly high.”
There is “ongoing real GDP growth, albeit at a slower pace.”
“Euro area exports should continue to be supported by the present level of expansion in the world economy.”
Risks to the economic outlook “remain broadly balanced.”
“Downside risks may have intensified.”
On bank stress tests:
“We welcome the EU-wide stress-testing exercise.”
“We also welcome the commitment made by national authorities to provide support facilities to banks.”
To contact the reporters on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net; Jana Randow in Frankfurt at jrandow@bloomberg.net.
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
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