Following are comments by European Central Bank President Jean-Claude Trichet at a news conference held after the bank's Governing Council left its benchmark interest rate at 1.5 percent on Thursday.
INTENSIFIED DOWNSIDE RISKS TO ECONOMY
We expect the euro area economy to grow moderately, subject to particularly high uncertainty and intensified downside risks.
ASKED ABOUT POSSIBILTY OF CHANGE TO MONETARY STANCE
For the future, as you know, we are never pre-committed. We always do what is necessary to preserve price stability and solidly anchor inflation expectations.
CHANGE IN ECB ANALYSIS SINCE LAST MONTH
The change is that, today, we see that there is downside risk to growth on the basis of the present analysis, which is, of course, a change, which is significant. And as regards the inflation, again, we had, last month, the sentiment that there was an upward risk for inflation. And today, we have the judgment that the risks for inflation are balanced.
ASKED IF WORLD ECONOMY NEEDS COORDINATED G7 ACTION
I told you what was our judgment, our appreciation of the situation and to which extent we had significantly changed our appreciation of the situation over the last developments that have been observed.
There is an enormous level of uncertainty, and I think that the main message in this domain would be uncertainties. It is really uncertainty at a global level and we see that clearly. It is also uncertainties certainly in the major economies outside Europe in the world. It is certainly also uncertainty by way of consequence and also for other reasons in the euro area.
ASKED ABOUT TALK OF GREECE LEAVING EURO ZONE
Our message for all governors ... since the setting up of the euro, has been: be very, very attentive to fully respect the Stability and Growth Pact ... fully implement what is necessary, of course, fully respect all the rules, be ahead of the curve, as I said and this, of course, is particularly valid for those who are in tensions, difficulty and for Greece, in particular, but not only for Greece, for all.
The inflation rate should fall below 2 percent in 2012.
MEDIUM-TERM PRICE RISKS BROADLY BALANCED
The Governing Council views the risks to the medium-term outlook for price developments as being broadly balanced.
MONITORING DEVELOPMENTS VERY CLOSELY
A very thorough analysis of all incoming data and developments over the period ahead is warranted. Inflation expectations in the euro area must remain firmly anchored in line with our definition -- with our aim of maintaining inflation rates below, but close to 2 percent over the medium term. Such anchoring is a prerequisite for monetary policy to make its contribution toward supporting economic growth and job creation in the euro area. We will continue to monitor very closely all developments.
LATEST ITALIAN AUSTERITY MEASURES
The last decisions that have been taken by the government and the votes of parliament, which is an ongoing procedure, of course, are confirming, which was very important for the Governing Council, was confirming the first commitment of the Italian government. So we have confirmation that there is implementation of what was said in terms of overall results. And that, of course, is of extreme importance.
A number of governments have announced additional (fiscal)measures to ensure the achievement of their consolidation targets and to strengthen the legal basis for national fiscal rules. To ensure credibility, it is now crucial that the announced measures be front-loaded and implemented in full. Governments need to stand ready to implement further consolidation measures. Notably on the expenditure side if risks regarding the attainment of the current fiscal targets materialize.
NON-STANDARD MEASURES STRICTLY TEMPORARY
The provision of liquidity and the allotment modes for refinancing operations will continue to ensure that euro area banks are not constrained on the liquidity side. All the non-standard measures taken during the period of acute financial market tensions are, by construction, temporary in nature.
READY TO PROVIDE LIQUIDITY
We stand ready to provide liquidity as we have done in the past, taking into account the needs of the banking sector.
ECB STAFF GROWTH FORECASTS CUT
September 2011 ECB staff macroeconomic projections for the euro area, which foresee annual real GDP growth in a range between 1.4 pct and 1.8 pct in 2011 and between 0.4 pct and 2.2 pct in 2012.
Compared with the June 2011 Eurosystem staff macroeconomic projections, the ranges for real GDP growth in 2011 and 2012 have been revised downwards.
ECB STAFF INFLATION PROJECTIONS
The September 2011 ECB staff macroeconomic projections for the euro area embody these considerations and foresee annual HICP inflation in a range between 2.5 pct and 2.7 pct for 2011 and between 1.2 pct and 2.2 pct for 2012.
In comparison with the June 2011 Eurosystem staff macroeconomic projections, the range for HICP inflation in 2011 remains unchanged while the range for 2012 is slightly narrower.
DAMPENERS ON GROWTH
A number of developments seem to be dampening the underlying momentum in the euro area, including a moderation of the pace of global growth, related declines in equity prices and in business confidence and unfavorable effects resulting from ongoing tensions in a number of euro area sovereign debt markets. As a consequence, real GDP growth is expected to increase very moderately in the second half of this year.
TIGHTER FINANCING CONDITIONS
Our monetary policy stance remains accommodative, some financing conditions have tightened.
ASKED ABOUT GERMAN CRITICISM OF ECB
We have delivered price stability... impeccably, impeccably. I would like very much to hear the congratulations for an institution, which has delivered price stability in Germany over 13 years... It was not by chance; it was because we decided very frequently to do things that were not recommended by the various governments. Our independence is inflexible... We are in the worst crisis since World War II. We do our job. It is not an easy job.
STANDING UP TO GOVERNMENTS
Some important governments in Europe were asking for weakening the Stability and Growth Pact. Do you remember that? And do you remember which government was asking for weakening the Stability and Growth Pact?... France, Germany and Italy.