Trichet's Hawkish Comments Fails to Boost Euro
ECB's Trichet stressed price stability remains key, and that the goal remains to bring inflation back below 2%. He also added that the central bank must watch secondary inflation. At the same time he admitted that the global crisis is an "ongoing event" and that the central bank is closely monitoring global markets. The comments confirm that the ECB is still far from cutting rates, despite slowing growth. Yesterday Trichet also said the "full body" of the financial system has to be reviewed and that officials must improve "transparency of institutions, transparency of instruments and financial instruments. He also said that loan growth in the Euro-Zone is still dynamic, which suggests he does not see a credit crunch. And Trichet pointed out that the ECB has no responsibility for insolvent banks, which is "the responsibility of executive branches".
However, the hawkish comments by the central bank president failed to fuel bullish sentiment for the euro. After hitting an intraday high of 1.4865, the euro-dollar (EURUSD) has given back earlier gains to hold near 1.48
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