Brussels, 31/03/2009 (Agence Europe) - Three days before the European Central Bank (ECB) Board of Governors is due to hold its meeting at which euro area interest rates will be decided (Thursday 2 April), ECB President Jean-Claude Trichet said that inflation would remain “well under 2% this year and in 2010”. Speaking to the EP economic and monetary affairs committee, he gave no indication of what the Bank would do, but, with inflationary pressures waning and confidence indexes at their lowest, observers would not bet against a further lowering of rates. Recovery depends on a return of confidence, which itself depends on swiftly implementing decisions taken, Trichet said.
Quickly applying recovery measures. In terms of economic recovery, the main thing is not to take any further measures, but “to apply what been decided. The main thing is that the financial sector is once again in a position to be able to lend money,” Trichet told José Manuel Garcia-Margallo y Marfil (EPP-ED, Spain). Noting that the positions of European and American leaders were coming closer together ahead of the G20, he said: “We all share the same aim: we want jobs and growth”. He told Elisa Ferreira (PES, Portugal) and others that decisions taken had to be applied. The key was how it was implemented: everything, he said, was a matter of confidence. In response to Margarita Starkevièiûtë (ALDE, Lithuania) who asked when recovery of the economy at a sustainable rate could be expected, Trichet said that 2009 would be a particularly difficult year when there would probably be growth throughout the year. “If we do what is needed, if we don't make any mistakes, if we manage to restore the confidence that has been lost … we will see recovery in the course of 2010. But it depends on us,” he said.
Financial supervision and the role of the ECB. Welcoming the proposal of the Larosière group for a European Systemic Risk Council under the auspices of the ECB, Trichet stressed that the warnings from the Council on the weaknesses of the system would have to be turned into political action. It was, then, very important to be sure that the recommendations get to where they are meant to go (they are due to be discussed by the Ecofin Council, he said), he told Jean-Pierre Gauzès (EPP-ED, France).
No hasty adoptions of the euro. Adopting the euro cannot take the place of putting in national policies that encourage appropriate convergence. “We are not a closed unit”, but “we have to abide by the rules. That's a good thing for everyone!” Adopting the euro too soon could make things more difficult for some countries, increasing the risk of inflation, he stated, rejecting any change in the rules or any speeding up of the procedure for enlarging the euro area. (A.B./transl.rt)