Ending his eight year term at the helm of the European Central Bank Jean-Claude Trichet warned of “intensified” threats to the euro zone economy.
At his last ever monthly policy meeting, Trichet pledged more money for the region’s banks to prevent a new credit crunch.
The ECB kept the cost of borrowing unchanged at 1.5 percent, but Trichet’s comments have investors thinking an interest rate cut is not far away.
Trichet thanked journalists for explaining the bank’s thinking during difficult times: “This is my last press conference following a meeting of the governing council, I remember my first press conference eight years ago, as if it were yesterday. We were never in calm waters, but for more than four years now we have been experiencing turbulent waters, storms, unexpected hurricanes: today it is part of the global state of the art and the Vice President and I, and all the governing council, we have also to thank you for that.”
To counter the turbulence Trichet said that as well as the emergency support for banks the ECB will buy up to forty billion euros worth of safer, high-quality bonds – in essence pumping more money into the economy.
How Trichet is remembered – and whether his presidency of the ECB is considered a success – will depend very much on the eventual fate of the euro zone.
Mario Draghi, currently Italy’s central bank governor, takes over the job at the start of November.
Trichet said he did not think Draghi needs any “special advice, adding he is “totally dedicated to our mandate”.