Soaring oil prices were not altering the European Central Bank's wait-and-see stance on interest rates, ECB President Jean-Claude Trichet said on Wednesday. The ECB was not leaning in any direction on interest rates, said Trichet on a day when oil held near record highs above $41 a barrel that one ECB policymaker has said may require the ECB to lower rates. "As regards the price of oil, it was not changing our own diagnosis, I mean the monetary policy diagnosis of the Governing Council of the European Central Bank," Trichet said. He was referring to the ECB decision at its last meeting in early May to hold rates steady at 2.00 percent and did not specify whether this took into account oil jumping through $40 a barrel since that ECB policy meeting. "I made the point that our own diagnosis was the same and our monetary policy stance was the monetary policy stance that you know .... namely, that we have no bias and we kept all our options open," Trichet said at a news conference during a seminar with the Bank of Russia.
By stressing he was not making any news, Trichet seemed to be repeating the ECB policy position at its May 6 meeting that oil was a new risk and the central bank is on high alert but keeping rates steady without any bias. For the first time, an ECB Governing Council member on Tuesday said that if a prolonged period of high oil prices thereatened economic recovery, the ECB would consider cutting interest rates. "We would have to respond with monetary policy," said Axel Weber, the new Bundesbank president at a news conference. So far though, ECB policymakers have said they see economic recovery slowly building despite the oil price shock. But top industrial nations clearly are worried that oil could derail a global rebound. Group of Seven finance ministers meeting in New York last weekend urged more oil production to safeguard the world economy. In Helsinki Trichet also called once again upon oil producers to act responsibly regarding the price of oil.///