As the ECB announced its interest rates leaving them steady at 1%, following was President Jean-Claude Trichet speaking at a press conference stating that economic recovery remains "uneven" but on the right track; while current interest rates are "appropriate".
Trichet's outlook for the economy is that growth will be witnessed but at a "moderate" rate during this year, while still there are low inflationary pressures over the medium term, which will support purchasing power.
The stimulus measures worth 60 billion euros are going to be existed gradually, such as pulling them out of markets quickly which might cause the euro zone to tumble; while the measures have been heavily aiding economic growth and easing the slide in inflation rates. The liquidity in the euro zone will be "absorbed when necessary" as Trichet states.
Although on the short run the liquidity is helpful for the euro zone, yet on the long run, it has a negative impact because this means that more money is to be paid back, like how Greece is dealing with the widened deficit and the highest in the entire 16-region nation. Trichet welcomes the measures applied by the Greek government to narrow the budget deficit, while stating that Greece to leave the euro is "absurd".
During the conference, also mentioned was that the International Monetary Fund (IMF) should not offer the euro zone aid, as the officials are willing to offer Greece aid if it is needed for them to narrow their swelling budget deficit.
Regarding the three-month loan will reverse back to variable interest rates on April 28th while the amounts provided by the central bank will assure that stability is witnessed in the money markets. Also stated, was that banks should strengthen their balance sheets while providing loans to consumers and businesses to get the business cycle moving.
The central bank projections for 2010 were the same as the ones released three months ago which were growth of 0.8%, while for next year, they were revised upwards by 0.3 percent from 1.2%.
