Last quote by Jean-Claude Trichet
Jean-Claude Trichet quotes
What is now necessary is to clarify crisis management in three dimensions: reinforcing the EFSF's capacity to ensure financial stability, strengthening the balance sheets of the European banks and working out an appropriate solution for Greece's medium term adjustments. This clarification is certainly urgent.
The crisis is systemic and must be tackled decisively, national governments and authorities as well as European institutions must rise to the challenge and act together swiftly, further delays are only contributing to aggravate the situation.
At the end of the year, we will probably post a deficit of public finance at around 4.5 percent of GDP, when in other major, advanced economies it is in the order of ten percent, and we also have an inferior level of outstanding debt.
At the same time, short term interest rates are low – while our monetary policy stance remains accommodative – some financing conditions have tightened.
So it is something which is big. It's big in Europe, it's big in the US, it's big in Japan, it's big in the rest of the world. We have to draw all the consequences form this crisis, in all domains, including of course the financial markets and the financial sector domain where a lot of reforms have to be implemented very rigorously and in Europe in particular we have a problem of improving our governance.
We are experiencing an episode in the history of the world, which is very very special. It is the gravest financial crisis – that is economic crisis – since World War II.
We asked the Italian government to take a certain number of decisions, which have been taken, and in particular to speed up their return to a normal budgetary situation. We asked the same of the Spanish government.
The governments are supporting the new programme for Greece with a voluntary contribution of the private sector.
The message of the governing council of the ECB is no credit event, no default.
We do always what is judged necessary by the governing council to deliver price stability and to solidly anchor the European economy in terms of price stability and of confidence.
Our monetary policy stance remains accommodative, lending support to economic activity. On balance risks to the outlook for price stability are on the upside, accordingly strong vigilance is warranted.
The EU will probably continue towards a completely new type of confederation of sovereign states. In this union of tomorrow, or of the day after tomorrow, would it be too bold, in the economic field, with a single market and a single central bank, to envisage an EU ministry of finance?
We continue to see evidence of short term upward pressures on overall inflation mainly owing to energy and commodity prices. This has not so far affected our assessment that price developments will remain in line with price stability over the policy relevant horizon.
No! This is not the position of the Governing Council, with an overwhelming majority.
In the event of non-compliance, sanctions need to be applied much earlier and to be broader in scope. They should not only address excessive debt ratios, but also apply when countries are not making sufficient progress toward medium-term budgetary objectives.
On the upside, the global economy and foreign trade may recover more strongly than projected, thereby further supporting euro area exports. On the downside, concerns remain related to new tensions in some financial markets segments and related confidence effects.
We must remain cautious.
The governing council – taking fully into consideration the situation of the recovery programme of Greece – decided that it would indeed tell the governments that there was a case for activating the bilateral loans.
The current key ECB interest rates remain appropriate, taking into account all information and analysis that have become available since our last meeting, price developments are expected to remain moderate over the policy relevant horizon.
I would say that taking all the information I have, that default is not an issue for Greece.
We have continued to gradually and (in a timely manner) phase out the non-conventional measures that we had taken. I would say that these decisions have been taken on the basis of an overwhelming consensus.
Greece today is in a much better state – taking into account its own activity, its own output – than it was before.
Despite the fact that we will have positive growth and we are out of this dramatic period of strong decrease of activity, we nevertheless are not very likely to have sufficient growth to permit to diminish unemployment.
Some of the factors supporting the recovery at present are of a temporary nature. The Governing Council expects the euro area economy to grow at a moderate pace in 2010, recognizing that the recovery process is likely to be uneven and that the outlook remains subject to high uncertainty.
There may be stronger than anticipated effects stemming from the extensive macroeconomic stimulus being provided and from other policy measures taken. Confidence may also improve more quickly, the labour market deterioration may be less marked than previously expected and foreign demand may prove to be stronger than projected.
Uncertainty is high, so I insist that if I have a message on behalf of the Governing Council it is that prudence and caution are still, if I may (say) of the essence.
Recent data releases and survey information still suggests that economic activity over the reminder of this year is likely to remain weak although the pace of contraction is clearly slowing down.
Today's decision has taken into account the expectation that price developments will continue to be dampened by the substantial past fall in commodity prices and the marked weakening in economic activity in the euro area and globally.
The world economy including the euro area is still undergoing a severe downturn with the prospect of both external and domestic demand remaining very weak over 2009 before gradually recovering in the course of 2010.
Everything we need to restore confidence.
I don't want to pre-empt in any respect what we could say; be sure that we would consider that by so doing we will optimise the appropriate help that we can offer to our economy, on enhanced credit support in particular.
Further decisions will depend on facts, figures, judgements on the basis of Governing Council discussions.
Today's decision takes into account that inflationary pressures have continued to diminish, owing, in particular, to the further weakening in the economic outlook, which adds clear further evidence to the assessment that the euro area is experiencing a significant slowdown largely related to the effects of the intensification and broadening of the financial turmoil.
I believe that we can be proud of the reaction of European authorities, parliaments, governments and central banks. Together we have shown that Europe is capable of taking decisions, even in the most difficult circumstances.
Global weakness and very sluggish domestic demand can be expected to persist in the last quarter of 2008 and in the next few quarters. Risks to economic growth lie on the downside, relating to concerns for a stronger impact on the real economy of the ongoing financial turmoil, protectionism and possible disorderly developments owing to global imbalances.
The outlook for price stability has improved further. Inflation rates are expected to continue to decline in the coming month. The intensification and broadening of the financial market turmoil is likely to dampen global and euro area demand for a rather protracted period of time.
It is possible that we would decrease rates again in the occasion of the next meeting of the Governing Council.
In the view of the governing council, the economic outlook is subject to increased downside risks, mainly stemming from a scenario of ongoing financial market tensions affecting the real economy more adversely than currently foreseen.
I would confirm that we in Europe are in a framework which is not a political federation, we do not have a federal budget and so the idea that we could do the same as what is being done on the other side of the Atlantic doesn't fit with the political structure of Europe.
The very clear principle guiding the setting up of the euro area – that through price stability and credible price stability over time – one was creating the conditions for sustainable growth and sustainable job creation.
The euro area economy is currently experiencing an episode of weak activity characterised by high commodity prices, weighing on consumer confidence and demand, as well as by dampened investment growth. We expect this episode to be followed by a gradual recovery.
The Governing Council is strongly concerned that price and wage-setting behaviour could add to inflationary pressures through broadly-based second-round effects.
The uncertainty surrounding this outlook for economic growth remains high and downside risks prevail. In particular, risks continue to relate to the potential for financial market turbulence, to have a more negative impact on the real economy than anticipated. Inflation rates have risen significantly since the autumn of last year, owing mainly to strong increases in energy and food prices.
It's absolutely clear the level of uncertainty resulting from the turmoil in financial markets remains high. Against this background, we emphasise that the firm anchoring of medium to longer term inflation expectations is of the highest priority to the governing council.
We believe that our current monetary policy stance will contribute to delivering price stability.
We were prepared to act pre-emptively so that second round effects and up-side risks to price stability would not materialise, and consequently we decided at today's meeting to leave the key ECB interest rates unchanged.
Who suffers most from inflation? Who suffers most from rising prices? It's the poor, not the rich. The rich can protect themselves from inflation, poor people can't. When we fight for price stability and against inflation, we're doing something that is most important for the most underprivileged among us.
It's our responsibility to make sure that this inflation is just temporary and doesn't spill over into the cost of living, and particularly that it doesn't affect wage negotiations. Because then, we'd have what we call second round effects, leading to inflation which would be long lasting, instead of being temporary and related to higher costs for oil and raw materials.
We will do what is necessary to continue to solidly anchor inflation expectations. We are looking very, very carefully at all the surveys, and all the information that we extract from the financial markets… and disorderly movements of exchange rates were never welcome.
We had seen a distinct possibility of the ongoing deterioration of the credit worthiness of borrowers in the US subprime mortgage market could be a trigger for more broad based market correction.
The turbulent stock prices triggered by the problems of subprime loans made it difficult to make financial forecasts. For that reason, it undermines the market sentiments. But the economic fundamentals, looking at it globally, are consistent, and to my knowledge, the Japanese economy is extremely consistent.
We decided at today's meeting to leave the key ECB interest rates unchanged. Strong vigilance is of the essence in order to ensure that risks to price stability over the medium term do not materialise, that medium to longer term inflation expectations in the Euro area remain solidly anchored at levels consistent with price stability.
At today's meeting, we decided to raise the key ECB interest rates by 25 basis points. This decision was taken in view of the upside risks to price stability.
After today's increase, given the favourable economic environment, our monetary policy continues to be on the accommodative side with the key ECB interest rates moderate, money and credit growth vigorous.
We are responsible for pride stability now, since the first of January for 13 countries, we will see exactly what the last figures are, but we are probably more than 315 million people – with Slovenia – and it is for 315 million people that we have to deliver price stability. The independence of the central bank is in the treaty; a fundamental decision has been taken by the Europeans, it is not to be disputed.
The ECB became aware of the subpoenas being imposed on SWIFT in June 2002. This information could according to these documents neither be transmitted to third parties nor be made public.
We have revised up both growth in 06 and 07 and the ranges for not only for growth but also for inflation. I explained to the ministers that strong vigilance in the present period was of the essence so as to ensure that risks to price stability are contained.
It is essential that inflation expectations remain firmly anchored at levels consistent with price stability. Accordingly, strong vigilance is warranted in order that risks to price stability are contained.
We saw the risks to price stability on the upside, clearly, and that is true for the short term, medium and long term. And that we saw the risks for growth on the balance on a short term to medium term basis, and on the downside for a longer term, because of the risks that are at stake. This is our present analysis, we will see exactly what we will do, but our mandate is clear, we have to deliver price stability.
Furthermore, we expect consumption growth to further strengthen gradually over time, in line with the developments in real disposable income, as the labour market situation and in particular employment growth gradually improves.
Economic growth is broadening and becoming more sustained. Looking further ahead the conditions are in place for more growth in the euro area to remain close to its trend potential rate, despite the impact of the rise in oil prices.
Risks for economic growth continue to lie on the downside and relate to high and volatile oil prices. We will continue to monitor very closely all developments with respect to risks to price stability in the medium term. All this relies on our own credibility and our credibility is that everybody knows that we act when necessary.
Our decision to increase interest rates was warranted so as to adjust our accommodative monetary policy stance while taking into account the risks to price stability that we identified in our economic analysis, cross-checked with our monetary analysis.
Price stability improves confidence of the household, and when you are credible over time you have low market medium and long-term rates, which is good for growth and job creation.
We have produced our most recent ECB staff projections, which envisage euro area real GDP growing at rates of between 1.0% and 1.6% in 2005 and between 1.3% and 2.3% in 2006. Compared with the June projections, the ranges projected for real GDP growth have been adjusted slightly downwards. For 2005, this mainly reflects slight downward revisions of past data, while for 2006 this reflects the projected effects on disposable income of increases in oil prices.
The level of interest rates is very low by historical standards, both in nominal and real terms, lending support to economic activity. . We will remain vigilant with regards to all developments which could imply risks to price stability over the medium term.
Some of the downward risks to economic growth identified earlier in particular those related to persistently high oil prices appear to have partially materialized over the past few months.
When looking beyond the short term, conditions remain in place for stronger real GDP growth.
Global growth remains solid, providing a favourable environment for euro area export. On the domestic side, investment is expected to continue to benefit from very favourable financing conditions, improved earnings and greater business efficiency.
We consider recent moves to be unwelcome. As regards to intervention, you know I never comment on such matters.
Persistently high and rising oil prices have had a visible, direct impact in the euro area, in particular, growth appears to remain limited in the context of ongoing moderate real GDP growth and weak labour markets.
Persistantly high and rising oil prices have had a visible, direct impact on consumer prices this year and inflation is likely to remain significantly above 2% in the coming months. This is a worrisome development.