BASEL, Switzerland (MNI) – The recovery of the global economy is
confirmed and the Eurozone has been one of many economies to surprise on
the upside, European Central Bank President Jean-Claude Trichet asserted
Monday.

Speaking in his capacity as chairman of the bimonthly Global
Economy Meeting held at the Bank for International Settlements, Trichet
said that the main observation of meeting participants was the
confirmation of the global recovery.

The recovery, is “particularly, I have to say, impressive in the
emerging economies,” Trichet said. “But it is confirmed at the global
level. In a number of cases, the real economy has demonstrated a
capacity to behave better than the previous projections and forecasts.”

This tendency, the ECB president said, “is observed in many
economies at the global level…But it is also the case until now in the
euro area.”

Inflationary threats are “present as some kind of general feature
in the emerging world, and that is something that you do not see…in
the advanced economies,” Trichet said. But he added that, “this is no
time for complacency and the solid anchoring of inflation expectations
is considered by all of us as something which is important.”

He continued: “it is clear…that it is extremely important that we
all keep control of inflation expectations, and that calls of course for
appropriate decisions. There is a unity of purpose at the Global Economy
Meeting, which is that we have to deliver price stability and we have to
be credible in that delivery.”

This “has nothing to do with the ECB” in particular, Trichet
hastened to add, in keeping with his assurance at the outset of the
briefing that his remarks should not be construed in the context of the
ECB’s upcoming monthly policy meeting on Thursday.

Trichet had no comment on exchange rates, and he said the meeting
did not address Portugal, stating merely that “the message for all
economies is certainly to have sound fiscal policies.”

There was “absolutely clear understanding” on the part of all
present, he insisted, that “fiscal soundness…was very important.”

Asked if he feared a commodity price boom, Trichet replied, “we
will see.” It is clear, he confirmed, that “we are at least seeing a
number of increases” in food prices, and he noted in particular the
contribution of oil prices to CPI.

“These are phenomena which have to be looked at very, very
carefully,” he said.

Trichet reported that the meeting had observed that foreign direct
investment was “in some cases particularly dynamic and particularly
helpful in terms of consolidating the recovery.”

However, he said, short-term capital inflows into emerging markets
“are from time to time a matter of concern.”

While the meeting today did not discuss the G-20 agenda, “I confirm
this idea that we have a very important issue with the inflows of
capital, particularly, I have to say, in the case of the emerging
countries.”

–Frankfurt bureau tel.: +49-69 720142. Email: dbarwick@marketnews.com

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