FRANKFURT (MNI) – European Central Bank President Jean-Claude
Trichet reiterated Thursday that the bank’s new strategy bond purchases
was aimed at restoring the functioning of financial markets and that the
liquidity injected would be sterilized.
In introductory remarks at a conference here commemorating the
services rendered by ECB Vice President Lucas Papademos, Trichet
underscored the central bank’s political independence and its commitment
to price stability.
“The ECB is fiercely independent and takes all its decisions
independently of governments, social partners and pressure groups of any
nature,” he said in a text provided in advance.
“We are inflexibly attached to price stability, our primary
mandate. Our successful track record since the inception of the euro is
remarkable.”
“Our present monetary policy stance is appropriate,” he said.
The liquidity provided through the Securities Markets Program for
public and private bond purchases “is withdrawn in its entirety through
tenders of term deposits,” Trichet said. “We are not engaging in any
form of ‘quantitative easing’.”
At times of financial stress, “the credible maintenance of price
stability becomes even more important,” he said. “Were the anchoring of
inflation expectations to weaken, financial market tensions would
intensify further and corrective measures would prove less effective.”
Recent experience has “vindicated in my view the importance
attached by the Governing Council to a close and regular monitoring of
the monetary data,” he added.
In addition, asset price developments must be monitored for
“potential misalignments,” Trichet said.
“Responding to monetary and credit dynamics as part of a
comprehensive assessment of the risks to price stability in the medium
term implies that interest rate decisions will tend to ‘lean against’
accumulating financial imbalances and asset price misalignments,” he
explained.
–Paris newsroom +331 4271 5540; e-mail: paris@marketnews.com
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