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ECB’s Trichet Says ‘Strong Vigilance’ Warranted on Inflation

European Central Bank President Jean-Claude Trichet comments on monetary policy, inflation and the region’s fiscal crisis.

He made the remarks in Frankfurt today after the ECB kept its benchmark interest rate at 1.25 percent.

On monetary policy:

“Strong vigilance is warranted.”

“On today’s decision, we were unanimous.”

“It means that we are in a mode where there might be in the next meeting an increase of rates, but we are never pre-committed.”

“ We are not signaling any particular pace for the next decisions on our interest rates.”

“ If we had decided to raise rates in the next meeting I would say it.”

“We decide on interest rates when we judge it is necessary to deliver price stability.”

“Overall our monetary policy stance remains accommodative.”

“The provision of liquidity and allotment modes for refinancing operations will be adjusted when appropriate, taking into account the fact that all the non-standard measures taken during the period of acute financial-market tensions are, by construction, temporary in nature.”

On Greece:

“We are not in favor of restructuring, haircuts and so forth. We exclude all elements which are not voluntary.”

“We call for avoiding all credit events and selective defaults.”

“We should not forget that private capital is also mobilized when you” privatize.

It would be “an enormous mistake to embark on a decision that would trigger a credit event.”

It’s “certainly not our intention” to roll over Greek debt held by the ECB.

On inflation:

“The information that has become available since our meeting on May 5, 2011, confirms continued upward pressure on overall inflation, mainly owing to energy and commodity prices.”

“In the Governing Council’s assessment, the risks to this economic outlook remain broadly balanced in an environment of elevated uncertainty.”

“Inflation rates are likely to stay clearly above 2 percent over the coming months.”

“Inflation expectations must remain firmly anchored in line with the Governing Council aim of maintaining inflation rates below, but close to, 2 percent over the medium term.”

“It remains of paramount importance that the rise in HICP inflation does not translate into second-round effects in price and wage-setting behavior and lead to broad-based inflationary pressures.”

“Upside risks may come from stronger-than-expected domestic price pressures.”

“We trust that when we contribute to solidly anchor inflation expectations, we contribute to confidence and a financial environment that’s favorable to medium-term growth and job creation.”

On Ireland:

“All that goes in the direction of more flexibility and structural reforms that permit to have a more vibrant economy is good. Ireland has the benefit to have an economy that is more flexible than others.”

On Draghi:

“Mario Draghi is a person of recognized standing and professional experience in monetary or banking matters.”

The ECB has “no objections” to the appointment of Draghi as its next president.

On the dollar:

“In the constellation of major floating currencies it is very important that the U.S. authorities say -- and they say that with some force -- they trust that a strong dollar is in the interest of the United States of America and also in the interest of the global economy. And I trust that.”

On banks:

“Banks that currently have limited access to market financing urgently need to increase their capital and their efficiency.”

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