Brussels, 07/02/2002 (Agence Europe) - At its meeting in Maastricht on Thursday (to celebrate the tenth anniversary of the European Council agreement on the Maastricht Treaty), the Governing Council of the European Central Bank (ECB) decided to maintain the ECB's base rates unchanged. Thus, the minimum bid rate on the main refinancing operations remains set at 3.25%. The interest rates on the marginal lending facility and the deposit facility remain unchanged at 4.25% and 2.25%, respectively. The President of the ECB, Wim Duisenberg considered that the rates were currently at a level "that remains adapted to maintaining price stability in the medium-term". He stipulated that this decision had also been taken because: - inflation in the euro zone would fall below 2.0% this year and remain there; - growth could amount to 2.0% to 2.25% by the end of the year; - "developments in theM3 monetary mass raise not risks for now for price stability" ("its recent progression comes within a particularly uncertain economic and financial environment and is therefore but a temporary phenomenon" he declared).
"The economic fundamentals remain healthy. Growth in revenue in the private sector and the fall in inflation should help a resumption in demand. The timing and magnitude of this revival remain uncertain, but the conviction that growth will strengthen remains", said Duisenberg, adding that "the latest information available confirms our prediction of a gradual improvement in economic activity in the course of the year". He explained that the uncertainties over the "global environment seem to be gradually diminishing". The President of the ECB reaffirmed that the introduction of coins and banknotes in euro had had no significant impact on prices. Therefore, "the prospects for inflation remain good", he considered, but with one reservation: that current wage bargaining does not get out of hand. He then again called for "wage moderation".
Answering questions put to him by reporters over the desire of certain Member States (like Germany) to secure more flexibility in the provisions of the Stability and Growth Pact, notably regarding budget deficits, Mr. Duisenberg said that "there is no question of a compromise on that subject, but if one can secure from the States concerned certain precise and definitive commitments, as warning will not be necessary and the principle of such a warning will have performed its role". As to whether Member States that are not part of the euro should vote on warnings over deficits, he said: "all Heads of State and Government signed the Stability and Growth Pact and it is up to them to decide how t vote. From my point of view, however, an abstention is a negative vote". He assured the support of the Governing Council for initiatives taken by the Commission and for the procedures provided for in the Stability Pact. The early warning system, sanctions and opinions "are essential elements of the Pact", said Duidenberg, stipulating that the early warning procedure had to be accompanied by a recommendation, which could consist in saying "ensure that the excessive deficit is not attained (…) In six months, a second recommendation may be necessary; should the situation worsen, it has to contain specific suggestions concerning measures to take, but we are not there yet".
Regarding Sweden's possible membership of the euro, Wim Duisenberg recalled that, like the others, "that country would have to respect the convergence criteria of the Maastricht Treaty. One of them is the independence of the Central Bank, notably its financial independence. Also, the Bank of Sweden will have to have capital and reserves capable of absorbing all types of shocks that could affect a Central Bank".