Trichet Indicates ECB Has No Immediate Plan For More Purchases - by Gabi Thesing and Christian Vits
European Central Bank President Jean- Claude Trichet indicated the ECB has no immediate plans to increase its asset-purchase plan or cut interest rates further as the economy shows signs of recovery. “After a stabilization phase, positive quarterly growth rates are expected by mid-2010,” Trichet said at a press conference in Frankfurt today after the ECB kept its key rate at a record low of 1 percent. When asked whether the bond plan would be expanded, he replied: “We have decided to embark on a 60 billion-euro purchase of covered bonds, full stop.” Evidence is mounting that the worst of the economic crisis may have passed. The contraction in Europe’s manufacturing and service industries is easing and European confidence in the economic outlook rose to a six-month high in April. In Germany, Europe’s largest economy, business sentiment increased for a second month in May.
Market Watch reports that the European Central Bank President Jean-Claude Trichet on Thursday reiterated the ECB's "fierce independence" to German Chancellor Angela Merkel after she earlier this week accused the central bank of bowing to international pressure by purchasing covered bonds in an effort to boost credit flows in the euro zone. Trichet, in his monthly news conference, said he received a phone call from Merkel and that the chancellor said she fully backed the ECB's independence. Trichet said the ECB has never responded to past calls for specific rate moves by various European politicians.
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