ECB reassures over Eurozone
EUROPEAN Central Bank (ECB) president Jean-Claude Trichet yesterday dismissed fears that the Eurozone could be faced with a double-dip recession after the bank held the bloc’s interest rates at one per cent.
The ECB has held its main rate at one per cent for 14 months but Trichet said that he expects the Eurozone’s economic recovery from the crisis to be moderate and uneven in pace.
The Eurozone economy would perform “much better” in the second quarter, according to Trichet, who suggested that the ECB might lean towards reducing a bond buying programme initiated in May to help deal with the sovereign debt crisis experienced by the 16-member European bloc.
A double dip into recession “is not at all what we are observing”, argued Trichet, who said the decision to publish stress test results on European banks was a welcomed move and that action should only be taken where problems arise.
“Sound balance sheets, effective risk management and transparent robust business models are key to strengthening banks’ resilience to shocks and to ensuring adequate access to finance,” Trichet said.