Trichet: ECB support temporary not QE, backs recovery
Posted Saturday November 13, 2010 1 day, 4 hours ago
By Marc Jones
TUTZING, Germany (Reuters) - The European Central Bank's crisis support measures are temporary in nature and should not be confused with quantitative easing, European Central Bank President Jean-Claude Trichet said on Saturday.
"All our non-standard measures help restore a more normal monetary policy transmission mechanism which is necessary to fulfill our primary mandate of accomplishing price stability," Trichet said in a speech at a conference organized by Germany's Political Club.
"It is not to be confused with quantitative easing policies that aim to reduce longer-term interest rates."
Trichet repeated the ECB's recent views that the euro zone economic recovery would continue for the rest of the year and that inflation was under control.
Trichet was speaking by a picturesque lake on the cusp of the Alps in one of Germany's most affluent and conservative regions.
He reiterated the ECB's opposition to EU leaders' recent decision to jettison ECB-backed calls for more automatic punishments to be included in new fiscal debt rules being drawn up.
"The ECB considers that they do not represent the quantum leap in the economic governance that is needed," he said.
"We need quasi-automaticity in the application of sanctions, based on clearly defined criteria and with less discretion over outcomes. And we need ambitious targets for the reduction of public debt toward the 60 percent of GDP ceiling."
Intense tensions about the debt levels of Ireland, Portugal and Greece remain center-stage in global economic fears.
Ireland is in talks to receive emergency funding from the European Union and is likely to become the second euro zone country after Greece to obtain an international rescue, official sources told Reuters on Friday.
The premiums investors demand to hold Irish and Portuguese debt have shot to record highs in recent weeks as fears escalate that both countries could eventually default on their debt.
"We need more European unity, more responsible European unity," Trichet said.
"We urge all governments to step up consolidation...It is essential that countries pursue credible multi-year consolidation plans and fully implement the planned consolidation measures."
(For full speech click: http://www.ecb.int/press/key/date/2010/html/sp101113_1.en.html)
(Reporting by Marc Jones)