26 January 2004, 12:16  ECB doesn't like excessive FX volatility - Trichet

MADRID, Jan 26 - The European Central Bank does not like excessive volatility nor excessive changes in exchange rates, ECB President Jean-Claude Trichet was quoted as saying on Monday. "We don't like either excessive volatility nor excessive variations of exchange rates," Trichet said in an interview with Spanish newspaper ABC when asked about the consequences of the strong euro for the European economic recovery. The euro has risen sharply against the dollar in recent months, sparking concern among some European businesses about its effect on euro zone exports. Asked if Group of Seven finance ministers and central bank chiefs would agree on intervention at their meeting next month, Trichet said: "Neither I nor any of my colleagues are accustomed to anticipating the content of G7 meetings. We'll meet all of the officials from the industrialised countries there and we will make a balance of the situation."
Trichet said inflation was showing "inertia" for the time being, but "in a longer term perspective we are sure that prices will return to the level that corresponds to our definition of stability, that is to say, below but close to two percent." "All this allows us to say that, in spite of this relative inertia of prices, we leave interest rates unchanged and confirm that monetary policy is in line with price stability and the preservation of confidence in price stability in the medium and long term," he said. ABC said the text of the interview had been read and checked by Trichet before publication. Trichet said the ECB's governing council did not think it was necessary to change the European Union treaty and believed that the letter of the EU's Stability and Growth pact was "appropriate in its current form".//

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