Forex – Trichet warns about sluggish demand for a protracted time, another
Trichet warns about sluggish demand for a protracted time, another rate cut possible
FXstreet.com (Barcelona) ECB President, Jean Claude Trichet has warned about global demand to remain dampened for a protracted time while he observed that the outlook for inflation has improved considerably in the late month, and left the door opened for a further rate cut in the coming months.
In a press conference hold after the release of the Bank decision to cut rates by 50 basis points to 3.25%, Trichet has warned about the impact of the financial turmoil over the global demand, which according to the ECB president will continue weakening for a protracted time.
Trichet has also affirmed that upside pressures to CPI have eased and that price and cost pressures will continue moderating over the next months so that price stability could be reached in the course of 2009. The Bank s Monetary Policy Committee will be focused on mid-term sustainability.
Economic activity has weakened significantly, and uncertainty has increased to extraordinarily high levels, but Trichet affirmed his conviction that government measures will help to restore confidence.
Given the circumstances and the economical situation, Trichet has defended the 50 basis points rate cut as appropriate, a decision that has been approved unanimously while he opened the door for a further rate cut, depending on economic data
FXstreet.com
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strategist@dailyfx.com (Ilya Spivak, Currency Analyst)
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