Eurozone interest rates remain appropriate, European Central Bank President Jean-Claude Trichet reiterated on Thursday. The central bank extended its unlimited liquidity boosting measures for banks until early next year as expected and raised the growth and inflation projections.
The central bank left its key interest rate unchanged at a record low of 1% for the sixteenth straight month earlier. Speaking at the press conference that followed the announcement of the decision, Trichet said price developments are expected to remain moderate over the policy-relevant medium-term horizon, benefiting from low domestic price pressures. The firm anchoring of inflation expectations remains of the essence, he asserted.
"Overall, the current monetary policy stance remains accommodative," Trichet said in his introductory statement.
Further, the Governing Council, which is the policy-making arm of the central bank, decided to continue its emergency lending measures for banks, Trichet said. The bank opted to conduct its main refinancing operations (MROs) and its special-term refinancing operations with a maturity of one maintenance period as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of this year's twelfth maintenance period on 18 January 2011. The fixed rate in these special-term refinancing operations will be the same as the MRO rate prevailing at the time.
The 3-month longer-term refinancing operations (LTROs) would be carried out in October, November and December this year, as fixed rate tender procedures with full allotment. Further, the bank will carry out three additional fine-tuning operations on September 30, November 11 and December 23 when 6-month and 12-month refinancing operations mature.
Lifted by investment and exports, the Eurozone economy marked its biggest growth in four years as estimated in the second quarter. Data released earlier in the day showed a 1% sequential growth in the second quarter. "Looking ahead, the recovery should proceed at a moderate pace, with uncertainty still prevailing," he said.
Trichet also announced that latest ECB staff macroeconomic projections for the euro area. Annual real GDP growth is forecast to range between 1.4% and 1.8% this year and between 0.5% and 2.3% in 2011. Trichet said the range for real GDP growth this year has been revised upwards, owing to the stronger than expected rebound in economic growth in the second quarter as well as better than expected developments over the summer months.
Inflation outlook was also revised upwards on account of higher commodity prices. Annual HICP inflation is seen in a range between 1.5% and 1.7% this year and between 1.2% and 2.2% for 2011. Euro area annual HICP inflation was 1.6% in August, as per Eurostat's preliminary estimate, compared with 1.7% in July.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.