Published: Fri, 06 Feb 2009 13:42:08 +0100

ECB's Trichet Says Rates at Zero Would be "Inappropriate" (Update)

"You have a number of anomalies that might appear when you are zero," Trichet said in an interview with Dutch television broadcaster RTLZ on Friday. "It is full of drawbacks."

However, Trichet added that there were other instruments that could be utilized, even if rates did come down to such levels.

At its meeting on Thursday, the Governing Council voted unanimously to keep its main refinancing rate unchanged at 2.00%.

However, acknowledging that inflationary pressures are easing and that growth would remain at weak levels for a protracted period of time, Trichet left the door open for the ECB to cut at its next meeting.

The ECB will look further at the situation at its meeting in March, Trichet said. At that meeting, the ECB staff projections for both inflation and growth are scheduled to be released and are widely expected to be revised down.

Written by CEP News European Staff, eunews@economicnews.ca, edited by Stephen Huebl, shuebl@economicnews.ca

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