Frankfurt, 05/07/2001 (Agence Europe) - On 5 July, the Governing Council of the European Central Bank kept its key rates unchanged. Thus, the minimum bid rate on the main refinancing operations remains at 4.50%, and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 5.50% and 3.50% respectively.
During his press conference, President Wim Duisenberg explained, as he had done in Strasbourg (see yesterday's EUROPE, p.9), that "overall, our current policy stance should ensure price stability in the medium term". Answering questions, he repeated that this is the position of the Governing Council and it "will remain so for some time to come". "If no further unfavourable shocks occur, it is likely that annual rates of inflation will start to fall and reach rates of below 2% in 2002", he said. The prospects for non-inflationary economic growth can be significantly enhanced by decisive structural reform, added Mr Duisenberg, insisting that: "delays in introducing such reforms on the basis of cyclical considerations would be at the expense of medium-term growth opportunities". The commitments made under the Stability and Growth Pact must be fulfilled, he reaffirmed. Also, answering questions on the possibility that Italy and Germany might not manage to attain budgetary balance until 2006, he replied that the issue had been discussed today (with the president of the Ecofin Council, Didier Reynders, and Commissioner Pedro Solbes). He admitted: "We see some slippage in the determination to go towards real budgetary balance or some surplus. This is a concern we raised and a concern I shall raise again".
Furthermore, Mr Duisenberg answered questions on: the weakness of the euro: "our conviction", he said, is that the euro continues to have a high appreciation potential; - his participation in the work of the Eurogroup: He assured he would be at the next meeting of the Eurogroup (next week) and, implicitly answering those (like Mr Reynders) who reproach him for not being there every time, he recalled that "normally, I am the spokesman" (of the ECB), but that there are other "qualified colleagues" who can replace him; - reproaches by certain American officials whereby the ECB is not doing enough for world growth: He said he does not make comments on the monetary policy of others, which also means "I do not listen to the advice I get from outside", he replied.
ECB Vice-President Christian Noyer pointed out to the press, among other things, that the Governing Council had called on governments "at every level" and on businesses to follow the example set by the Eurogroup (which has pledged that conversion into euros would be "neutral" in price terms, or rounded in favour of consumers), and that he had encouraged consumers to follow price movements with great vigilance.