RTTNews - Friday, the European Central Bank President Jean-Claude Trichet said this is a time of unprecedented uncertainty and challenges. He noted that Eurozone policymakers did not hesitate to charter unknown territory and to move forcefully to battle the adverse consequences of the financial crisis.
We have to respond forcefully to the challenge, but we should never forget the principles for sound macro-economic policy making, Trichet said.
On Thursday, the ECB left its key interest rate unchanged at a record low of 1% and Trichet detailed the plan to buy covered bonds worth EUR60 billion in the primary and second markets. The ECB has lowered interest rates by a total of three and a quarter percentage points since early October 2008.
Speaking at a conference in Warsaw to mark the 20th year of the collapse of the socialist economy in Poland, the central bank chief said the Governing Council would not compromise, in any respect, the longer-term achievement of the price stability objective or encourage or tolerate imprudent behavior by market participants.
He noted that the non-standard policy measures adopted by the ECB are unprecedented in terms of their breadth and depth. The evidence of ECB's bold as well as solidly anchored response to the crisis is encouraging, he added.
While long-term inflation expectations continue to remain broadly anchored at levels consistent with price stability, our measures show some signs of revival in the functioning of money markets in Europe.
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