European Central Bank President Jean-Claude Trichet said threats to the euro region have worsened and inflation risks have eased, giving officials the option to take further action should the debt crisis worsen.
The economy faces “particularly high uncertainty and intensified downside risks,” Trichet said at a press conference in Frankfurt today after the ECB left its benchmark rate at 1.5 percent. While monetary policy is still “accommodative,” financing conditions have worsened in parts of the euro region and the ECB stands ready to pump more cash into markets should that be required, he said.
The ECB also cut its growth forecasts for this year and next and abandoned its warning about looming inflation threats.
“The situation has deteriorated so much that they should throw the kitchen sink at it,” said Julian Callow, chief European economist at Barclays Capital in London. The ECB could cut rates, offer banks unlimited liquidity for up at a year or deploy a combination of those measures, he said. Today’s comments “went further in a ‘dovish’ direction that we had expected….”
Find out more at http://www.bloomberg.com/news/2011-09-08/trichet-says-growth-outlook-worsens-in-euro-region-as-inflation-risks-wane.html
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