Brussels, 04/04/2002 (Agence Europe) - The European Central Bank's board of governors (ECB) decided on Thursday to keep the main interest rates unchanged. The minimum lending facility applied to the main refinancing operations remains at 3.25%, its rate in November last year. The marginal lending facility and the deposit facility will remain unchanged at 4.25% and 2.25% respectively. Whilst worried by the rise in oil prices, the ECB believes that the current key interests rates are "appropriate" in ensuring medium tem price stability.
During a press conference, ECB President Wim Duisenberg confirmed the beginning of the upturn in European activity, whilst recognising that it was impossible for the time being to measure its vigour, notably in the current context of oil barrel price increases. Mr Duisenberg asserted that the recent rise in oil prices was slight but if it continued or increased there would obviously be dangers to production and inflation. He stressed the relationship between these price rises and its impact on inflation and said that if the level of the fall in inflation could be less than anticipated: initial indications for March see a figure of 2.5%, declared Mr Duisenberg. He confidently asserted that the ECB continued to believe that the rate of inflation would remain below the 2% threshold at the end of the year. The French Minister for the Economy, Laurent Fabius said that a barrel of crude oil at USD 30 could put a brake on the world economic upturn. Mr Duisenberg called once again for Euro-zone countries to keep wage increases down, in an effort to master the risks to price stability and encourage employment.
Mr Duisenberg pointed out that budgetary policies in the Euro-zone could also contribute to maintaining perspectives favourable to non-inflationary growth. He said that it was essential that commitments to balanced budgets for 2003-2004 were strictly respected by Member States. He also recommended that Member States took advantage of the economic upturn to carry out structural reforms in the areas of public spending, State revenues, financial markets, products and labour markets. This, he said, remained an objective of Heads of State and Governments confirmed at Barcelona. The ECB President also pointed out that Money Supply (M3) (one of the main inflation indicators) was also slightly less in February (7.8% in December 2001 and February 2002 as opposed to 8% during the November 2001 to January 2002 period but that there was a persistence in the excess of liquidity in the economy which could become worrying in the context of an upturn in the economic activity of the Euro-zone. Mr Duisenbeg pointed out that strong monetary aggregate was still due to an accumulation of liquidity since autumn 2001 following the attacks in the USA on 11 September.