FRANKFURT (MNI) – Risks for Eurozone economic growth are now seen
tilted to the downside, while inflation risks are no longer to the
upside but balanced, European Central Bank President Jean-Claude Trichet
said Thursday.
“Today we see that there is a downside risk to growth,” Trichet
told reporters after the ECB’s Governing Council unanimously decided to
leave key interest rates on hold, as expected.
The downward shift in growth risks is “significant,” Trichet said,
when asked about the outlook for monetary policy going forward.
“If I compare today with what we had said a month a go, I would say
that a month ago we considered that the balance of risk for growth was
balanced…which is not the case today,” he said.
“As regards the inflation again we had last month the sentiment
that there was an upward risk for inflation and today we have the
judgement that the risks to inflation are balanced,” he said.
“These are the two major, I would say, changes in the overall
appreciation by the Governing Council of the present situation,” Trichet
said. “All that based upon a baseline scenario that was revised down as
regards growth”.
The shift in risks for growth and inflation, coupled with the
downward revision in the ECB staff’s outlook for Eurozone growth clearly
reduce the need for further monetary tightening over the medium term.
Trichet continued to characterize current monetary as
“accommodative” but noted a “tightening of financial conditions” in some
parts of the Eurozone.
–London newsroom: 4420 7862 7492; email: ukeditorial@marketnews.com
[TOPICS: M$$EC$,MT$$$$,M$X$$$,MGX$$$,M$$CR$]