ECB SEES TENTATIVE SIGNS OF STABILIZATION IN SOME SECTORS OF ECONOMY

PanARMENIAN.Net
08.05.2009 12:38 GMT+04:00

/PanARMENIAN.Net/ European Central Bank President Jean-Claude Trichet
said the euro-zone economy was showing tentative signs of stabilizing
at a very low level, after the ECB cut interest rates to a new record
low on Thursday.

The ECB cut another 25 basis points from its benchmark refinancing
rate, taking it to 1 percent, and Trichet said inflationary pressures
had diminished in what remained a severe economic downturn.

"The latest economic data and survey suggest tentative signs of
a stabilization at very low levels after a first quarter which was
significantly weaker than expected," Trichet told the news conference
after the bank’s decision.

"The world economy including the euro area is still undergoing a
severe downturn with the prospect of both external and domestic
demand remaining very weak over 2009 before gradually recovering in
the course of 2010."

He also said inflation expectations remain firmly anchored and were
consistent with keeping inflation in line with the bank’s target of
price growth at or just below 2 percent.

"The outcome of the monetary analysis indicates that inflationary
pressures have diminished," he said.

Euro zone inflation is at a record low of 0.6 percent and although
some economic data are showing signs of stabilisation, the European
Commission this week forecast the euro zone’s economy would shrink
4.0 percent this year.

The ECB has cut rates from 4.25 percent since last October, Reuters
reported.