FRANKFURT (MNI) – The speed and path of the European Central Bank’s
exit from non-standard liquidity measures will depend on financial
market developments and the economy, European Central Bank President
Jean-Claude Trichet said Tuesday.

Evidence suggests that the bank’s enhanced credit support policies
helped ensure the effectiveness of the cuts in ECB policy rates, Trichet
said, according to remarks prepared for delivery at Northwestern
University’s Kellogg School of Management in Evanston, Illinois.

He reaffirmed that the central bank’s monetary policy stance will
be designed to deliver price stability in the medium and long term, in
line with its definition of close to but below 2%.

The global economy is recovering, albeit gradually, the ECB
president noted.

“All in all, the evidence suggests that the enhanced credit support
policies introduced by the ECB were successful in ensuring the
effectiveness of the reduction in the key ECB policy rates,” he said.

Currently, such improvements are guiding a gradual process of
phasing out of such measures, he explained.

“The speed and path of the phasing-out of non-standard measures
will depend on developments in financial markets and the economy,”
Trichet said. “The current situation of ample liquidity in euro area
money markets guarantees a continued positive impact on financing
conditions,” he added.

In regards to the monetary policy stance, Trichet assured that “it
will be designed as always to deliver price stability, in the medium and
long term, in line with our definition.”

Trichet said “it is very important” that non-conventional measures
should “never run against our primary goal, which is to deliver price
stability over the medium term.”

“It is the core of the so-called “separation principle,'” he
explained.

“This has been well understood by the observers and the market: our
medium to long-term inflation expectations have remained well anchored
since the beginning of the period of turbulences,” he noted.

–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com

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