The President of the European Central Bank, Trichet told a news conference after the meeting of the institution that current levels of base rate are appropriate and recent economic data confirms this. At the meeting it was decided to maintain the rate of 1 percent, supported unanimously, he added. According to him, it was noted that good signals for economic stabilization and expects inflation to moderate in positive levels, and inflation stability will be maintained to support the private costs. Trichet said the moderate growth of loans maintain low inflation. In August the annual inflation rate was minus 0.2%. Economic recovery, although expected to be “uneven”, said President of the ECB. He warned that the risk to see if further recovery of tightening fiscal policy. Departure from current policies of fiscal stimulus must be made at a time when the recovery remain
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On a business forum in Barcelona, European Commission President Jose Manuel Barroso predicted that the world will be the same after pass this economic crisis. Barroso said that Europe will start to come out of the crisis in 2010 He said the continent should be made much effort to overcome the serious situation. Barroso for most of Europe’s main concern is unemployment. This is the main drama of European society. Barroso added that the European Union will show flexibility in terms of limit of 3 percent of GDP, which must not pass the budget deficits of member states of the Union.
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The Eurozone consumer prices decreased on an annual basis for the first time in June, which coincides with the prediction of the European Central Bank (ECB) says Finance.news, quoted by Eurostat. Core inflation has also declined by 0.1 percent in June after an earlier yearly inflation in 16 states, adopted the euro, was 4 percent. Time of ETSBK said it expected strong fluctuations in raw material prices last year would lead to a decline in inflation on a monthly basis for several months before it becomes positive again at the end of this year. Reiterated several times that the short-term movements in inflation should not be taken into account in monetary policy. The Economists are of the opinion that the fall in prices will lead to a prolonged period of deflation. Prices of fuel and transport decreased by 18.8% yearly base and for heating fuel fell by 39.3 percent.
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The Gold reserves of the European Central Bank, including claims in gold (physical gold, such as bars, coins, ingots, and storing pieces of monetary gold, as balances on accounts with gold) decreased by EUR8.5 billion to EUR232.128 billion during the week ended July 3, according to today’s report of the financial institution. The change primarily reflects the quarterly revaluation adjustments and reserves and selling gold to EUR5.0 million from a central bank in the euro area, indicating the report of the ECB. Foreign exchange reserves showed a net decrease of EUR10.5 billion to EUR206.2 billion for that period. ECB reported an increase of money in circulation in 16 EU member states of the euro by EUR6.6 billion to EUR768.7 billion.
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Italy’s central bank will buy bonds secured 10 billion euros as part of the European Central Bank for the purchase of bonds for a total of 60 billion euros, reported Reuters. Total program of 60 billion euros has been allocated among the 16 countries of the euro on the basis of their shares in the capital of the ECB. ECB President Jean-Claude Trichet said on Thursday that the bank will begin its emergency program to purchase secured by mortgage and public debt bonds of July 6, with a maturity of between three and 10 years. National central banks will make 92 percent of purchases under the program, which aims to increase the liquidity of banks and to promote credit flows. Each of the central banks of the euro area countries will come on the market as other investors who participate in bids when purchasing bonds on the primary market or secondary market. In the latter case the central bank will make an offer for a significant amount and will have to focus on securities that are sufficiently liquid.
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The European Comitee will propose in Friday measures for regullating of the market of derivatives, increasing the fears of bankers in the Eurozone, that the sector may hurt seriously by this. After the latest USA financial tools were announced many of the analyzers claim that this may even make the crisis stronger.
The report of the comitee most probably will pay attention to similar proposes, just like those announced from the administration od Barak Obama, which signed changes in the regulation with the derivatives over the price of enegry resources and corporate crediting. Some bankers are affraid that the comitee may try to win some political points, with offering more restrictable changes. Another analyzers claim that the industry already is in need of more serious actions to decrease the market risks. The reports of European Cometee will not have the power of laws, but they can help in forming future practises for regulation of large dealers of directives.

The President of the European Central Bank Jean Claude Trichet said that current levels of interest are adequate and recent economic data confirms this. Trichet said the decision to preserve the basic interest rate was unanimous, but can not believe that 1 percent is the minimum of interest on refunds. According to him, the economic slowdown will reduce the pace in the second half of the year and next year is expected positive economic growth. Trichet said that inflation expectations remain very limited and monetary analysis show that the medium is a time price stability. In his negative rates of inflation will be short, for the next few months. He stressed that short-term movements in inflation are not taken into account when taking political decisions. President of the ECB believes that pressure on prices has weak economic activity, as though inflation is derived from the growth of money, there is a clear monetary expansion. According to him the negative inflation of consumer prices for June is in line with the expectations of the ECB, in the medium term is possible rise of oil and other energy. Trichet reported that a decline in short-term loans, but banks have already “moved” low interest rates to consumers. Therefore, he expected an improvement in conditions in the financial sector, but banks need to strengthen its capital base.
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