Venice was the venue for this month’s meeting of the European Central Bank’s policymakers and there were no surprises from them.
The benchmark interest rate remained at one percent in the 16 countries that use the euro. ECB president Jean-Claude Trichet said the rate is “appropriate” signalling the bank is in no hurry to raise the cost of borrowing. He warned the recovery will likely be “uneven” but said the euro-zone economy is showing signs of stabilisation. He told reporters: “There may be stronger than anticipated effects stemming from the extensive macroeconomic stimulus being provided and from other policy measures taken. Confidence may also improve more quickly, the labour market deterioration may be less marked than previously expected and foreign demand may prove to be stronger than projected.” Trichet said the latest analysis by the central bank’s economists “confirms the assessment of low inflationary pressure over the medium term.” Analysts expect the next interest rate change to be a increase but not before the third quarter of next year.