–Adds Additional Comments On ECB Monetary Policy Outlook
FRANKFURT (MNI) – Current inflationary pressures are “transitory,”
but they could become more embedded in the economy if the European
Central Bank doesn’t take the appropriate actions, ECB President
Jean-Claude Trichet said on Friday.
In an interview with CNBC, Trichet hinted that the ECB will hike
rates again, saying that the ECB was now in the same “mode” as in
December 2005, when it started its last rate hiking cycle.
While acknowledging that the current spike in inflation was mainly
due to commodity prices, Trichet stressed that the ECB still needed to
take the appropriate decisions.
“It is a hump in the CPI,” Trichet said. “We have no direct impact
on the price of oil. But we have to care for the medium run. It depends
on us that it would be transitory. That’s the idea.”
“If we are alert and if we take the right decision, then it is
transitory,” Trichet continued. “If we let the second round effects
materialize, then it is not transitory. That is the issue for us.”
The central banker once again highlighted how the ECB was “highly
criticized” in December 2005 when it had embarked on a series of rate
increases.
“Everybody would say now that we were absolutely right of course to
increase rates,” Trichet said. “And we are now in this mode. We have
increased rates last month. We will have in the next month, as you know,
our own new projections, then we will have a full picture of the
situation and then we will take an appropriate decision.”
“Again, all what we do is directed, concentrated on delivering
price stability in the medium term,” Trichet continued. “That is what we
have as our mandate.”
The ECB chief also reiterated his trust in comments from U.S.
officials recently about the importance of a “credible and strong”
dollar, which he said was in the interest of the “international
community.”
— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
[TOPICS: MT$$$$,M$$CR$,M$X$$$,M$$EC$]
