(CEP News) Frankfurt - (CEP News) Frankfurt - European Central Bank President Jean-Claude Trichet reiterated an additional “measured” rate cut is not excluded and said that the economy may recover over the course of 2010.

“One further rate cut is not excluded, as already indicated,” Trichet said in interviews with Japanese news agencies Kyodo News and Jiji Press published on Sunday.

However, while hinting that the main refinancing rate would fall to a new record low 1.0%, Trichet stressed that rates would likely not fall below that. A “zero interest rate is not at all appropriate in the

euro area,” Trichet said.

Trichet also said that the ECB will have come to its final decision about additional, non-standard measures to be taken and make any announcements at its next policy meeting in May.

“As regards the decisions we already took, not only we took the decisions to embark on full-allotment, fixed-interest supply of liquidity from one week to six months but we said also that we will continue to do that for as long as needed and at least until January next year,” Trichet said.

The central banker also said that he expects 2009 to be a “difficult year” and that, while surveys may indicate that the economy will not deteriorate further, activity will remain at a very weak level.

Nevertheless, an economic recovery could come over the course of next year. “But that depends on the effectiveness in regaining confidence,” Trichet said.

“Surveys still show low confidence,” Trichet said. Caution is required.

Furthermore, “lower oil and commodity prices” monetary and fiscal measures, and the “resilience of emerging

economies” will also help, he added.

The policy maker added that he “appreciated” U.S. officials’ commenting that a strong dollar is in the interest of the U.S, and that the ECB “does not campaign for international use of the euro.”

Trichet also highlighted the ECB’s objective of price stability over the medium term.

“We have a primary goal which is clear,” the ECB President said, adding that the price stability means an inflation rate of below, but close to, 2%.

“That means everything is anchored in our own euro-area universe to this medium-term price stability definition,” he added.

Written by CEP News European Staff, eunews@economicnews.ca

CEP Newswires - CEP News © 2009. All Rights Reserved. www.economicnews.ca

The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.

A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.

Posted in Categories: Economy, Eurozone, Japan, Releases, USA.

Subscribe by RSS Subscribe by Email