THE EUROPEAN Central Bank (ECB) cut short its rate-hiking cycle yesterday due to “intensified downside risks” to growth that it said will bring inflation below its two per cent target next year.
ECB president Jean-Claude Trichet signalled that the Bank is now relatively more concerned about the economic recovery, seeing the risks of price instability and stagnation as “balanced”.
He also launched a fierce defence of the Bank’s reputation, blaming the debt crisis on “governments [who] have not behaved properly”.
In response to criticism of the ECB’s decision to buy Eurozone government bonds to stem the rise of borrowing costs, he demanded “congratulations” for delivering price stability in Germany that is “better than what has ever been obtained in this country over the past 50 years”.
“We do our job. It’s not an easy job,” he added. “We try to be up to our responsibility and they are very heavy responsibilities, very heavy.”