Interview he gave last week.

• Preferable to have more than three ratings agencies

Meanwhile back at the ranch EUR/USD remains busy going nowhere. At 1.2595 basically where it stood at the North American close Monday.

Euro zone economic data today:

German wholesale price index for June expected +0.2% m/m, +5.5% y/y

06:45 GMT: French CPI for June expected flat m/m, +1.5% y/y

09:00 GMT: German ZEW survey for June; economic sentiment expected 25.3 from 28.7

Buy orders noted 1.2550 and decent sized at 1.2480/00 including sovereign interest, stops through 1.2540. Sell orders 1.2630/50, stops through 1.2660

• Idea that austerity measures could trigger stagnation is incorrect
• Euro is very credible currency, a currency which safeguards price stability is a major asset in the eyes of investors
• Am confident we are on right track for regulatory reforms, a number of important decisions are to be taken at November G20

• Responding to monetary and credit dynamics by assessing risks to price stability implies interest rates decisions will tend to “lean against” accumulating financial imbalances and asset price misalignments
• Bond purchases on the secondary market cannot be used to circumvent budgetary discipline
• We are inflexibly attached to price stability
• Price stability and proper transmission of monetary policy stance were are guiding principles when deciding on recent emergency measures during the renewed tensions in financial markets in early May
• Rates are appropriate, we are sterilising bond market interventions
• Securities markets programme is time bound in nature

• Encouraging signs in other countries too on fiscal consolidation
• Imperative that G20 timelines agreed in 2008 for regulatory reform are met
• Important impact of reforms thoroughly assessed, will consider IIF analysis
• Market players have to accept main purpose of financial sector is to serve real economy (he’s sooo funny)
• Recent market tensions show there is no time for complacency
• Important recovery measured in broader terms than GDP, sustainable fiscal positions
• Recovery must include full restoration of trust in financial institutions

• Bond programme is designed to ensure effective monetary transmission mechanism
• Have not changed monetary policy stance as a result of bond purchase programme
• We said we would withdraw extra liquidity and this is working week after week
• We are inflexibly attached to price stability
• High o/n deposits illustrate market tensions
• Money market not functioning perfectly
• On bond purchase programme – we don’t give anymore information
• Asked if ECB considering additional liquidity measures -says to adopt fixed rate with full allotment in 3-month till Sept 2010. Decision on 3-month operations unanimous
• We are following very carefully what happens in central and Eastern European countries
• Euro is very credible currency. Has exceptional track record. Capacity to preserve value is a major asset
• Appropriate to continue to buy bonds

• Euro zone’s growth pattern could be uneven
• Latest information confirmed that recovery continued in H1 2010
• Expected to grow at moderate pace in 2010
• Sees unusually high uncertainty around outlook
• Inflation expectations remain firmly anchored
• Non standard measures taken and securities market programm are in line with mandate
• Monetary stance, liquidity will be adjusted as appropriate
• Ongoing recovery at global level supports demand for exports
• Recovery of activity to be dampened by balance sheet adjustments
• ECB staff project 2010 GDP growth in 0.7%-1.3% range. 2011 growth in 0.2% to 2.2% range. Forecasts broadly in line with other international forecasts
• Inflation rise in recent months mostly reflects energy prices. Can’t exclude further increase
• ECB staff project inflation in 2010 at 1.4%-1.6% range. 2011 forecast 1%-2.2% range
• Banks must expand supply of credit. Should turn to market to strengthen capital
• Welcomes recent decision to set up stability facility
• Calls for decisive action by governments to achieve lasting, credible budget consolidation
• Essential that all stick to promise to correct deficits, debt. Key that new budget targets be achieved
• Structural reform crucial to support sustainable recovery

• We’re not running the money printing machines
• Must remain alert
• ECB actions in line with what treaty allows it to do
• Everyone knows budget discipline is necessary
• Nobody doubts our independence
• Greece must rigorously apply fiscal consolidation programme
• Asked if France must reform pension system, replies “obviously”
• Return to sound finances is vital for economic growth
• I am more than confident in the future of the euro

ECB’s Trichet, who capitulated on a January pledge not to relax lending rules for the sake of one country, may have to sacrifice more principles to prevent Greece from bringing down the euro.  Bloomberg article.

Meanwhile EUR/USD hovering around session low, presently at 1.3175.

• Need to have strong focus on expenditure reforms

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