Thursday, June 04, 2009

Trichet at it again...

...ah, now THIS time his observations must be correct, given his record for assessing economic conditions and projecting likely outcomes.

June 4 (Bloomberg) -- The European Central Bankkept its benchmark interest rate at a record low of 1 percent today after first signs of an economic recovery emerged.

President Jean-Claude Trichet also said the ECB will start its plan to buy 60 billion euros ($85 billion) of covered bonds in the primary and secondary markets next month. The Bank of England today left its rate at 0.5 percent.

“The current rates are appropriate,” Trichet said at a press conference in Frankfurt. “For the remainder of the year economic activity will decline with much less negative rates.”

The 22-member Governing Council has been split over whether to follow the Federal Reserve and Bank of England, which have cut their key rates close to zero and are buying government and corporate bonds to tackle the worst recession in six decades. The debate over how far the ECB should go reached the highest level of European government this week, with German Chancellor Angela Merkel backing the Bundesbank’s view that asset purchases are a step too far.

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