After the ECB left rates steady at 1.0%, Troichet held the press conference in Frankfurt following the decision, and provided the Governing Council's view on monetary policy and the outlook.
Though he started by stating that the economic activity saw recovery in the second half of this year, and that signs of stability continued into the fourth quarter, Trichet still saw that the recovery was to be moderate into the coming year and might be uneven, as the outlook remains uncertain.
On rates, he reiterated his stance and the governing council that current rates are appropriate, and that was a unanimous stance of members. The will act strongly to anchor inflation expectations, as price developments remain subdued and the outlook to inflation remains broadly balanced. Nevertheless, he said that a strong US dollar is very strong, and that it holds risks to the economy and assured that he was inline with what Bernanke said on a strong dollar policy.
On growth he added that the economy is to grow gradually into 2010 and projected 2011 growth stronger at 2.2%. Yet downside risks to growth are seen from oil prices and protectionism.
As for the most awaited part, the non-standard measures; after he said that the measures will be withdrawn gradually and balanced and will remain as needed; the governing council decided unanimously to make the coming December 15 tender for 12-month loans the last, which will also be indexed according to minimum bid rates and not fixed as before.
Trichet said that this move should not be taken by the market as a sign for move on the benchmark rates as they remain appropriate.
Once the last 12-month refinancing operations will be held this month, the ECB saw that not all measures are needed as they continue to restrain down gradually the liquidity provided to banks, as also the announced that March 31, 2010 will be the last for six-month operations.