Highlights: Trichet comments at ECB news conference

By @ibtimes on

Following are comments by European Central Bank President Jean-Claude Trichet at a news conference held after the bank's Governing Council kept interest rates at a record low of 1 percent on Thursday.

AVOIDING SECOND ROUND EFFECTS

We see that there is a strong need to avoid second round effects but at the moment we see inflation expectations solidly anchored.

DANGEROUS SPLIT FROM THE FED'S STANCE?

We have our own responsibility, the Fed has its responsibility.

We always in the past ... took our decisions taking into account our own responsibility.

What we have done ourselves is to judge our own situation.

ON PRICES, from ECB statement

Strong vigilance is warranted with a view to containing upside risks to price stability. Overall, the Governing Council remains prepared to act in a firm and timely manner to ensure that upside risks to price stability over the medium term do not materialize.

It is essential that the recent rise in inflation does not give rise to broad-based inflationary pressures over the medium term.

ON LIQUIDITY, from ECB statement

The provision of liquidity and the allotment modes will be adjusted as appropriate, taking into account the fact that all the non-standard measures taken during the period of acute financial market tensions are, by construction, temporary in nature.

ON STRONG VIGILANCE

Strong vigilance is warranted with a view to containing upside risks to price stability.

ON INFLATION RISKS

Risks to the outlook for price developments are on the upside.

It is essential that the recent rise in inflation does not give broad-based inflationary pressures over the medium-term.

ON CHANCES OF RATE RISE IN APRIL

I would also say that we are mentioning that we are in a posture of strong vigilance and my understanding is that the position of the governing council is that an increase in interest rates at the next meeting is possible.

As you know we are never precommitted the decision as always will be taken by the gov council depending on new info and incoming data, so it is not certain (in April), of course, it is possible.

Asked about whether a potential rate hike at the ECB's next meeting would signal start of a round of such hikes:

It is certainly not the sense of the start of a series of rate hike increases.

We do what we have to do to deliver price stability in the medium term using the interest rate tool and our standard and non-standard measures.

Particularly when we have a shock -- and we have a shock -- our responsibility is to prevent a second round of effects (from high oil prices).

ON CHANCES OF AN EXTENDED CYCLE OF RATE RISES

Asked whether a potential rate hike at the ECB's next meeting would signal start of a round of such hikes:

It is certainly not the sense of the start of a series of rate hike increases.

Let me be very clear. The attitude of the Governing Council is that we have expressed our judgment as clear as possible.

I would certainly not embark in anything more and it is certainly not a sense that it is the start of a series of interest rate increases ... it is true that we have considered and taken into account the fact that the balance of risk that was coming from the economic analysis was as we had said at the meeting in January and February there is a risk it could move on the upside.

ASKED TO CONFIRIM ECB WAS NOT GOING TO ANNOUNCE PLANS FOR DEPENDENT BANKS

If and when we have a plan we will announce it.

ASKED IF EUROPEAN COMMISSION SHOULD LAUNCH INFRINGEMENT PROCEDURE AGAINST HUNGARIAN GOVT OVER ITS PLANS TO CHANGE CENTRAL BANK RULES

We are very unsatisfied with the position taken by the Hungarian government and we will see exactly what are the appropriate steps to take into account.

It's the responsibility of the Commission. We have to see what are the next steps. I don't exclude anything.

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