Brussels, 05/02/2004 (Agence Europe) - The Governing Council of the European Central Bank (ECB) decided in Frankfurt on Thursday not to change its interest rates. Accordingly, the minimum bid rate applied to principle re-financing operations and the interest rates of the marginal lending and deposit facilities will remain at 2%, 3% and 1% respectively.
At the press conference, ECB President, Jean-Claude Trichet, repeated that the Governing Council felt the current stance of monetary policy was "appropriate". The ECB also believes that "Inflationary risks should be contained by somewhat more favourable import price developments, and economic recovery in the euro zone should proceed in line with our expectations", added Mr Trichet. On the euro, the ECB stressed its stability once again, and expressed its "concern" on exaggerated exchange rate movements.
According to the ECB chairman, the external climate of the euro zone continues to develop favourably. The ECB's expectations are particularly high for sturdy growth in GDP in most of the economies of the EU's trade partners, although progress in exports may be affected by the fall in competitiveness of prices. Mr Trichet also said that conditions were favourable for an improvement in internal demand. On price evolution, the ECB continues to expects the inflation rate (2% in January) to fall below 2% during the year.
Several issues relating to budgetary policy caught the ECB's attention:
1) an implementation of budgetary policies in line with commitments taken last year: when the Member States' new stability programmes were being assessed, Mr Trichet called for "all parties involved to live up to their responsibilities and commitments". Healthy public funds will help "support a stable macroeconomic framework, which in turn enhances confidence and promotes investment, growth and employment in the euro zone", he said.
2) concern at the conclusions of the Ecofin Council of November 2003 on the French and German budgetary deficits: "the Commission is the guardian of the Treaty and the ECB respects the Commission's decision to seek legal clarity" on the application of the Stability Pact, said Mr Trichet.
3) Necessary improvement to Pact's implementation: whilst stating that the "Stability and Growth Pact is adequate under its current form" and that the Treaty should not be modified, the ECB President welcomed the Commission's willingness to step up the implementation of budgetary monitoring (analyses of structural imbalances and reinforcement of means of getting healthy policies in healthy economic times).