ECB President Juan-Claude Trichet commenced the press conference that precedes interest rate decision by his usual line of Benchmark interest rate is appropriate, assuring that the bank expects low domestic price pressures along with price development to remain moderate over the upcoming period, supported by better economic conditions during the second quarter of this year, that will maintain growing and expanding throughout the third quarter of this year.
Despite recent improvement, economic growth in the region is will remain moderate and at uneven pace as the economic outlook is still uncertain. Trichet expressed that inflation is at appropriate levels where monetary policy stance will be adjusted when needed, hinting for no change in interest rates over the short-term.
As for inflation, Trichet assured markets that Medium-Term inflation remains well Anchored, while the bank will seek to maintain price stability over the upcoming period. Trichet stated that We remain firmly committed to price stability over the medium to longer term.
Trichet stated that The governing council has today also decided to continue to conduct its main refinancing operations (MROs) and its special-term refinancing operations with a maturity of one maintenance period as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of this year's twelfth maintenance period on 18 January 2011.
The fixed rate in these special-term refinancing operations will be the same as the MRO rate prevailing at the time. Furthermore, it has decided to conduct the 3-month longer-term refinancing operations (LTROs), to be carried out in October, November and December 2010, as fixed rate tender procedures with full allotment. The rates in these 3-month operations will be fixed at the average rate of the MROs over the life of the respective LTRO. Adding that The governing council has also decided to carry out three additional fine-tuning operations on 30 September, 11 November and 23 December when 6-month and 12-month refinancing operations mature.
ECB forecast growth in 2010 will range of 1.4 percent to 1.8 percent and growth in 2011 will be 0.5 percent to 2.3 percent. Risks to improved economic outlook are tilted slightly to the downside. Moreover, Inflation in 2010 will be 1.5 percent to 1.7 percent and 1.2 percent to 2.2 percent in 2011. Risks to the outlook for inflation are slightly tilted to the upside. Inflation rates are expected to increase slightly later in the year. Inflation should remain moderate overall.