BRUSSELS (MNI) – Observers should not take any monetary policy
signals from the money market reaction to the European Central Bank’s
refinancing operations, ECB President Jean-Claude Trichet said on
Thursday.
“There is no monetary policy signal in this move, none at all,”
Trichet told reporters at a press conference.
“We observed that the banks were asking for less refinancing than
they had been before,” Trichet said. “We are still in a mode … of full
allotment.”
“The fact that we have observed E79 billion less has been
interpreted by the markets as proof of normalization. I would not
contradict this analysis,” he said.
“What has been judged is that banks have required less liquidity
that before. It had a impact on money market rates. It was not
engineered. We observed that. There is no monetary policy signal with
(the) market move,” Trichet said.
The ECB continues to “call on banks to take all appropriate
measures to reinforce (their) balance sheets, their capital base and
when it is needed to ask public authorities to activate appropriate
support,” he said.
Trichet was speaking at a press conference after the ECB held its
key rate at 1% for the 18th-straight month.
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
[TOPICS: MT$$$$,M$$EC$,M$X$$$,M$$CR$,MGX$$$]