Trichet Says Crisis May Limit Monetary Policy Leeway
European Central Bank President Jean-Claude Trichet said financial market turmoil may leave central banks with less leeway to decide on interest rates.
“We are clearly concerned about the real impacts of the financial market turmoil, as it impacts also on the policy options of central banks, including monetary policy,” Trichet said at an economic policy forum at New York University yesterday. “We’re in a situation of high uncertainty, where risks are very difficult to quantify.”
The ECB has kept its key rate at 4 percent to fight inflation at a 16-year high, even as the economy of the 15 euro nations loses momentum. The International Monetary Fund on April 9 cut its euro-region growth forecast for this year and said the world economy faces a 25 percent chance of recession.
Trichet Says Credit Crisis May Limit Monetary Policy Leeway
Simone Meier and Sandrine Rastello
Bloomberg, April 15 2008