Nov08-Wim Duisenberg said the decision to cut 50bp was "easy" after looking at new data. HICP to fall "safely below" 2% in 2002. But Sep11 impact larger than previously thought, so EMU recovery to come later than previously thought. ECB thinks it is unlikely EMU to fall into recession, but growth in next few quarter to be very weak. ECB still see recovery in 1st half 2002, but to be "moderate." Rate cut was not coordinated with Fed/BOE. Rates not appropriate for medium-term inflation outlook. Downplayed M3 growth. Announced that henceforth ECB to decision monetary policy only at first meeting each month.
Nov08-ECB cut rates greater-than-expected 50 basis points.
Nov07-Ernst Welteke said the full effect of ECB rate cuts this year hasn't been felt yet, largely due to continued risk aversion after Sept. 11. But as time passes and markets regain confidence, risk spreads will diminish, improving financing conditions. Said the growth slowdown would be "temporary." Conceded that sentiment indicators point to further weakening of eurozone economic activity. But sentiment is likely worse than actual conditions. Again played down the ability of either monetary or fiscal policy to fine-tune the business cycle. Said fiscal policy is expansive and there is no room for special stimulus steps. Nov05-Wim Duisenberg said he told Ecofin ministers "our most recent assessment is that inflation is falling to levels well below the 2% limit." He added: "It will be early next year, but then it will be well below (2%) and then it will stay there. I'm sure the Governing Council will take all the factors leading to this phenomenon well into account.
Nov03-Ernst Welteke expressed concern about long-term inflation expectations, saying further interest rate cuts might lead to excessive liquidity. Repeated that real interest rates are low, saying the 100 bps in ECB rate cuts this year will take time to work through the economy. Expressed concern about the possible emergence of a speculative bubble, noting that the gap between M3 growth and the ECB's reference value is "steadily increasing." Said the current economic slowdown was largely psychological and that neither fiscal nor monetary policy could boost consumer and business confidence. Said current ECB policy is not harming growth. The ECB "can pursue other goals," if there is no danger to price stability. Said he was "cautiously optimistic" about economic developments in 2002. Said EMU fundamentals are "largely in order."
Nov01-Lucas Papademos said outside pressure on the ECB to cut rates was "definitely not helpful" and "may complicate (ECB) decision making." Oct31-Christian Noyer repeated that the ECB "will change interest rates if and when it receives new information on the whole of the eurozone which will let it change its mind on inflation prospects." Stressed the ECB must make sure that rate cuts doesn't risk price stability. Stressed again the need for EMU states to maintain medium-term deficit cut plans and said the world would avoid recession.
Oct30-Otmar Issing said good reasons to expect HICP to fall below 2% in the course of 2002 even though the drop in inflation is taking longer than the ECB would have liked. Also stressed the ECB has "deaf ears" to calls for it to neglect its price stability goal. Said the ECB can act "quickly and decisively" to change rates if it sees the need. Said 3Q and 4Q EMU GDP would be "extraordinarily weak." While the ECB expects an EMU economic recovery in the course of 2002, "it is still too early to say for sure," that the economy has stabilised. Stressed the difficulty in interpreting data at the moment.
Oct29-Ernst Welteke said Europe is seeing "good news on the price front," and the ECB will cut interest rates if it can do so without endangering price stability. Early indicators "point to a further fall in inflation in the near future." Said EMU growth is now "significantly below" trend potential, and a return to 2.5% growth "will be delayed." But there are reasons for optimism, as the expansionary effects of past rate cuts are still in the pipeline and low real interest rates make EMU financing conditions "favorable." Said that EMU fiscal policy has no room to stimulate growth beyond allowing automatic stabilizers to work.
Oct27-Guy Quaden said a rate cut could help lift market psychology and is likely to follow if EMU inflation and growth continue to weaken. But he stressed that the current EMU interest rate levels are low and not hindering growth.
Oct26-Ernst Welteke said the ECB should act "prudently" and not "hectically," given extreme uncertainty at the moment. Said stabilising confidence was the key job of EMU policy makers, adding he didn't expect Europe to fall into recession. Said EMU fiscal policy had "little leeway" to act due to insufficient consolidation in the past. Fiscal policy loosening could thus hurt confidence. Said the ECB would have to watch rising M3 growth closely, but for now there was no inflation risk.
Oct26-Jean-Claude Trichet said the "unfortunate under-valuation" of the euro made EMU monetary conditions looser but predicted the currency would see a "clear re-appreciation." Said the ECB's decision to leave interest rates unchanged wasn't hurting the euro "at all." Said the ECB would not bend to political pressure for a rate cut. Expressed his "full confidence" that EMU governments would respect the Stability Pact.