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By Paul Carrel
October 30, 2011 9:14 PM EDT
Markets have over-interpreted comments by incoming European Central Bank chief Mario Draghi on the bank's readiness to go on buying the bonds of troubled euro zone states, outgoing ECB President Jean-Claude Trichet said.
In a wide-ranging interview at the end of his eight-year term, Trichet welcomed what he saw as a commitment by euro zone governments at a summit last week to intervene in bond markets via the EFSF rescue fund to fight the bloc's debt crisis.
The ECB embarked on its own bond-buying programme in May of last year but the plan has proven controversial, leading to the resignation of two leading German policymakers at the bank, and Trichet has appeared keen to withdraw from the policy.
Draghi seemed to take a different stance last week, appearing to signal that the ECB stood ready to go on buying bonds, intervening in debt markets to lower the borrowing costs of countries snared by the crisis.
Trichet said too much had been read into Draghi's comments.
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"I don't think that Mr Draghi said that," he said of the message understood by financial markets that the ECB would go on buying bonds.
"I think there has been an over-interpretation," he added, looking out from the 32nd floor of the ECB's Frankfurt headquarters.
The confusion over Draghi's message highlights the importance of communicating ECB policy -- an area where Trichet has largely succeeded, delivering a clean, consistent message that has endeared him to financial markets.
A Reuters poll of euro money market dealers conducted after Draghi's comments showed a majority expect the ECB to carry on buying sovereign debt in secondary markets once the European Financial Stability Facility (EFSF) is empowered to do the same.
Speaking in Rome on Wednesday, as EU leaders were heading to Brussels for their summit, Draghi said: "The Eurosystem (of euro zone central banks) is determined, with its non-conventional measures, to prevent malfunctioning in the money and financial markets creating an obstacle to monetary transmission."
Draghi used language similar to that employed by the ECB to explain the reactivation of the bond-buy programme in August, when it said the plan was aimed at "restoring a better transmission of our monetary policy decisions taking account of dysfunctional market segments".
Trichet declined to say what advice he would give Draghi, who takes over as ECB president on Tuesday, but stressed the collegiate nature of the bank's policymaking Governing Council.
"This is a team ... it's a position of team leader," he said. "What counts is he is inside -- it's not like a change of government. He was a member of the government he will preside over, if you take the metaphor."
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