JEAN-CLAUDE Trichet signed off as president of the European Central Bank (ECB) yesterday, sticking to his guns over interest rates yet pledging to pump funds into the banks.
Trichet’s press conference was far calmer than last month’s, when he railed against criticism and demanded that “congratulations” be extended to the ECB for delivering price stability. “We try to be up to our responsibilities and they are very heavy responsibilities, very heavy,” he said at the time.
But yesterday Trichet (right) struck a conciliatory tone, reflecting on his eight years in charge. “For more than four years now, we have been experiencing turbulent waters, storms, unexpected hurricanes,” he said, praising the importance of the media during times of crisis.
Interest rates will be kept at 1.5 per cent, Trichet said, defying calls from the ECB’s doves to ease policy in light of the ongoing Eurozone debt crisis.
Yet the outgoing president threw another lifeline to struggling European banks through the purchase of covered bonds and with a renewed offer of longer-term loans to ward off a new credit crunch.
Trichet leaves the ECB with inflation across the Eurozone at around three per cent. “Inflation has remained elevated,” he admitted yesterday, but said that he expects price pressures to ease after a few months.
The French 68 year old’s legacy is likely to depend on the outcome of the ECB’s controversial bond-buying programme – and whether the euro survives long-term without a major depression. Two German officials -- Axel Weber and Juergen Stark -- quit the ECB this year in protest at the plan.
Trichet will be replaced by Italian central banker and economist Mario Draghi.