Brussels, 13/01/2011 (Agence Europe) - The president of the European Central Bank, Jean-Claude Trichet, said on Thursday 13 January after a meeting of the ECB governors, and in response to a question about the EFSF fund set up in the spring of last year to help eurozone countries (see EUROPE 10292), that he thought the fund should be boosted both quantitatively and qualitatively. He would not comment on the interest rates set on the EFSF loan for Ireland because the EFSF is governed by eurozone countries. The interest rates at which international loans have been issued to Greece and Ireland may be on the agenda of Monday 17 January's Eurogroup meeting.
Trichet said the ECB would continue to adjust “as appropriate” its special temporary bank finance measures that it has decided to continue until April this year while discouraging banks from becoming too dependent on low ECB interest rates (see EUROPE 10269). In December 2010, Portuguese banks were given a loan of nearly €41bn from the ECB, for example. Asked about the ECB's purchase of sovereign debt, particularly Portuguese treasury bonds, Trichet said it was important for eurozone countries to clean up their public finances, introducing further austerity measures where necessary. Asked about the danger of the ECB itself turning into a bad bank because of its accepting questionable securities in return for loans, Trichet dismissed the idea as “absurd”, adding that the doubling of the ECB's capital was planned a long time ago.
No change in interest rates. The ECB unanimously decided to keep eurozone interest rates unchanged at 1% for the main refinancing operations, 1.75% for the marginal loan facility and 0.25% for the deposit facility. Agreeing that inflation had been higher than predicted at the end of 2010 because of the hike in energy prices, Trichet said that inflation may well continue to rise in the next few months but then dip again at the end of the year without overshooting the medium-term price stability target. (M.B./transl.fl)