ECB to gradually withdraw stimulus measures

| November 20, 2009 | 0 Comments
ECB to gradually withdraw stimulus measures

Jean-Claude Trichet, President of the European Central Bank (ECB), has said liquidity measures will be scaled back in order to ensure it doesn’t fuel inflation.

Currently the inflation rate within the 16 nations that use the euro is 0.5% but at the start of the summer, inflation turned negative for the first time, declining to -0.1% as a result of falling energy and fuel prices.

Last week, official figures revealed that the euro zone economy experienced positive growth of 0.4% in the third quarter, and therefore unofficially exiting from recession.

Speaking at the 19th Frankfurt European Banking Congress: “After the Crisis” today, Mr Trichet said any measures that pose “a threat to the achievement of price stability must be undone promptly and unequivocally”.

He adds: “Recent financial developments have been more benign, it is true. However, a significant volume of official support underlies these developments.”

“It is nevertheless important that the exceptional support provided by central banks doesn’t degenerate into long-term dependence of the private sector on such support,” explains Trichet.

“For that reason, the current non-standard monetary policy measures will have to be progressively phased out,” adds Mr Trichet.

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