Brussels, 04/03/2004 (Agence Europe) - To a more clement backdrop of a fall in the euro on the currency markets, the European Central Bank (ECB) decided on Thursday not to change its interest rates, despite increasing political pressure for greater monetary flexibility to support economic growth in Europe. The minimum bid rate applied to the principal re-financing operations and the interest rates of the marginal lending facility and the deposit facility thus remain unchanged, at 2%, 3% and 1% respectively.
Answering questions from the press about increasingly urgent appeals to reduce rates, ECB President, Jean-Claude Trichet, said "we are keeping our ears open and we know the Treaty. The general feeling in Europe, including public opinion, is that we should take our decision independently (...). It's not easy, to be honest, but our firm conviction is that we must not be swayed".
The Board of Governors concluded that the current situation in monetary policy remains "appropriate", and that it "is helping to support economic growth in the euro zone", explained Mr Trichet. He feels that Eurostat's latest estimates confirm that a gradual boost in economic activity in the euro zone took place in the second half of 2003 (see other article). The ECB expects "moderate" economic growth at the beginning of 2004, and several factors (external and internal) lead to predict "a strengthening of growth in 2004 and beyond", stressed the ECB President. The Central Bank also predicts "robust" world economic growth in 2004, and an increase in private demand in Europe.
After February's figures (1.6%), the ECB expects a slight increase in euro zone inflation over the next months (due to base effects related to energy and increases in indirect taxation). But there is really nothing to worry about, said Mr Trichet: "the ECB believes that inflation is under control, and that our definition of price stability is being respected". "The citizens who were reluctant to consume or to invest should be aware that the time has come to do so", he added.