WARSAW (MNI) – The decrease in long-term interest rates in the
economies of Central and Eastern Europe is due to the anchoring of
inflation expectations as inflation itself has subsided over the years,
European Central Bank President Jean-Claude Trichet said Friday.
Speaking at a conference of the National Bank of Poland, Trichet
said of the CEE states, “Looking at the region as a whole, after some
very difficult years, inflation has come down dramatically from very
high levels at the beginning of transition to single-digit levels
today.”
“Long-term interest rates have also fallen substantially,
reflecting the gradual anchoring of inflation expectations,” he
continued.
However, he said, “the entrenchment of a low inflation environment
still constitutes a challenge in many economies,” noting possible labor
and product market rigidities and “in some cases, an excessively loose
macroeconomic stance.”
The ECB is “making a key contribution” to CEE economies by its
“extensive liquidity provision” to Eurozone banks whose subsidiaries in
CEE thus benefit “from this ample liquidity.”
In his relatively brief remarks, Trichet made no comments directly
relevant to current ECB policy.
–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com
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