Trichet comments at ECB news conference

FRANKFURT (BestGrowthStock) – 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.

FED NOT TRYING TO WEAKEN DOLLAR WITH QE2

“I have no indication that would change my trust in the fact that the Federal Reserve Chairman and that the Secretary of the Treasury, not to speak of the President of the U.S., are not playing the strategy or tactics of a weak dollar.

“I have no reason not to trust them. And again, I trust their statement and the fact that it is in the interest of the U.S. to have a strong dollar.”

ASKED WHETHER FED QE2 HAS IMPACT ON ECB

“We have our mandate and … the Governing Council of the ECB is faithful to its mandate … Ask everybody to judge ourselves on the results of our policy … So no further comments on what is done by other Central Banks that have their own responsibility and their own environment.”

NEW EU FISCAL FRAMEWORK

“They do not go as far as the quantum leap in the economic governance of monetary union that it has been calling for. In particular, the Governing Council is concerned that there will be insufficient automaticity in the implementation of fiscal surveillance, that there is no specification of the rule to reduce the government debt ratio and that financial sanctions have not been explicitly retained under the macroeconomic surveillance procedure.”

‘HEAVY’ COMMUNICATION WITH EU LEADERS OVER CRISIS RESOLUTION PLANS

“I made remarks on the occasion of the European Council. These remarks were addressed to the presidents and to the prime ministers that were in the European Council. They were not for other interlocutors … I consider that this is the property of the heads (of governments). I mentioned that I didn’t say anything publicly. A communication took place, which was quite heavy and I don’t deny, of course, what has been said.”

POSITIVE ECONOMIC FACTORS

“The global recovery is expected to proceed and this should imply a continued positive impact on the demand for euro area exports. At the same time, private sector domestic demand should contribute to growth, supported by the accommodative monetary policy stance and the measures adopted to restore the functioning of the financial system.”

DOWNSIDE RISKS TO ECONOMY

“The recovery in activity is expected to be dampened by the process of balance sheet adjustment in various sectors. In the Governing Council’s assessment, the risks to this economic outlook are still slightly tilted to the downside with uncertainty prevailing.

“On the one hand, global trade may continue to grow more rapidly than expected, thereby supporting euro area exports. On the other hand, some concerns remain relating to the re-emergence of tensions in financial markets. In addition, downside risks relate to renewed increases in oil and other commodity prices, protectionist pressures and the possibility of a disorderly correction of global imbalances.”

IRELAND’S NEW CUTS ‘NOT INSUFFICIENT’

“The 15 billion (new savings) that you mentioned are not, in our view, insufficient at the moment I am speaking … You have to be alert permanently and stand ready to do all that is needed permanently, but I have no negative appreciation of the 15 billion.

“My interpretation is that this message of the (Irish) government, which would be a message on particularly the frontloading of the program, is of extreme importance. I have no reason myself to think at the present moment that the observers will be disappointed.”

BOND-BUYING PROGRAM NOT OVER

“I already said (the bond buying program ) is not over.”

LATER: “Beware of not realizing that we are giving information every week and the information comes after the transactions have been settled. So you have always information that are not real-time information. They are addressing what has happened a number of working days before. So I say that, but you will see that the program exists.”

PROGRAM NOT TARGETTING SPREADS

“We never targeted any particular spreads or whatever on the market. And that is absolutely obvious because month after month and week after week what we are doing and you can see what happens.”

HOW TO WEAN BANKS OFF ECB FUNDING

“It is not a normal situation to be in a situation where we have institutions that are addicted, quote, unquote, and it is for us a permanent reflection on how to treat progressively this problem.”

DECEMBER ‘RENDEZVOUS’ ON LIQUIDITY MEASURES

“I give you a rendezvous in the next meeting. We will have to make up our mind and see what we do for the next month and the rendezvous is for December from that standpoint.”

INTEREST RATES, NON-STANDARD MEASURES NOT CORRELATED

“We are, I would say, not correlating on (inaudible) non-standard measures and on the other hand, our own interest rates. We can move interest rates without necessarily getting totally out of these non-standard measures.”

ASKED IF IMPENDING ECB SUCCESSION IS UNDERMING HIM

“I don’t think so. Frankly speaking, I have precisely a mandate of eight years and a mandate of eight years is there precisely to give you authority until the last moment.

The Governing Council is the authority, which takes the decision and I have a profound trust in collegial wisdom.”

MONEY MARKETS

“(Bank’s demand for ECB loans) is some kind of equilibrium, which is depending on what the banks themselves are asking for and you can see it goes up, down from time to time very much depending on the bank’s demand themselves.

“The only important observation I would make that, of course, it shows that we are in the normalizing process and that is, of course, an important element… From our part, there was no signal at all, no monetary policy signal.

“Normalizing, which has been under our eyes I would see what happens later on, but that is the observation that I would make and of course, I have to say for me, a normalizing is something which is positive.”

FISCAL POLICY

“It is essential that countries pursue credible multi-year consolidation plans and fully implement the planned consolidation measures. In their 2011 budgets, they need to specify credible fiscal adjustment measures, focusing on the expenditure side. Any positive fiscal developments that may emerge, reflecting factors such as a more favorable than expected environment, should be exploited to make faster progress with fiscal consolidation.”

BANKS

“Banks have continued to gradually increase the weight of credit to the private sector in the overall size of their balance sheets, but the challenge remains to expand the availability of such credit when demand picks up further. Where necessary, to address this challenge, banks should retain earnings, turn to the market to strengthen further their capital bases or take full advantage of government support measures for recapitalization.”

DESIRES MORE FLEXIBLE CURRENCIES

“Orientations have been taken by particularly in the Toronto Summit that (countries with less flexible currencies) they would progressively make their exchange rate more flexible.

“We consider that this goal is in the right direction, that it is certainly in the interest of those currencies that are not at the moment we are speaking sufficiently flexible. And it is also in the interest of the entire international community.

MONEY SUPPLY

“Broad money and loan growth remain low and continues to support the assessment that the underlying pace of monetary expansion is moderate and that inflationary pressures over the medium term are contained.”

BANK LOAN GROWTH

“The annual growth rate of bank loans to the private sector is increasingly supported by the flow of loans to non-financial corporations. The annual growth rate of these loans is still slightly negative, but developments in recent months suggest that the turning point was reached earlier in 2010. This would be consistent with the lagged response of loan developments to economic activity over the business cycle that was also observed in past cycles.”

PRICE RISKS

“Risks to the outlook for price developments are slightly tilted to the upside. They relate, in particular, to the evolution of energy and non-oil commodity prices. Furthermore, increases in indirect taxation and administered prices may be greater than currently expected, owing to the need for fiscal consolidation in the coming years. At the same time, risks to domestic price and cost developments are still expected to be contained.”

INFLATION OUTLOOK

“In the next few months, HICP inflation rates will hover around current levels before moderating again in the course of next year. Overall, in 2011, inflation rates should remain moderate.”

NON-STANDARD MEASURES

“The current monetary policy stance remains accommodative. This stance, a 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 fully consistent with our mandate and, by construction, temporary in nature. Accordingly, the Governing Council will continue to monitor all developments over the period ahead very closely.”

RATES APPROPRIATE

“The Governing Council continues to view the current key ECB interest rates as appropriate. It, therefore, decided to leave them unchanged.”

PRICE DEVELOPMENTS TO REMAIN MODERATE

“We continue to expect price developments to remain moderate over the policy-relevant medium-term horizon.”

RECOVERY MOMENTUM POSITIVE, UNCERTAINTY PREVAILS

“Recent economic data are consistent with our assessment that the underlying momentum of the recovery remains positive. At the same time, uncertainty is prevailing. Our monetary analysis confirms that inflationary pressures over the medium term remain contained.”

Trichet comments at ECB news conference