PARIS (MNI) – Those who argue that the fiscal austerity measures
being implemented by many European governments will lead to economic
stagnation are wrong, European Central Bank President Jean-Claude
Trichet said in an interview published Thursday morning.
To the contrary, countries must begin cutting their deficits in
order to restore confidence, which is necessary for economic growth,
Trichet told Italy’s daily newspaper La Reppublica.
Trichet was asked about the view of some economists that there is a
threat of deflation hovering over Europe. “I don’t think that such risks
could materialise,” he said. “On the contrary, inflation expectations
are remarkably well anchored in line with our definition — less than
2%, close to 2% — and have remained so during the recent crisis. As
regards the economy, the idea that austerity measures could trigger
stagnation is incorrect.”
He added, “everything that helps to increase the confidence of
households, firms and investors in the sustainability of public finances
is good for the consolidation of growth and job creation. I firmly
believe that in the current circumstances confidence-inspiring policies
will foster and not hamper economic recovery, because confidence is the
key factor today.”
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–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com
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