ECB starts to phase out emergency stimulus
European Central Bank President Jean-Claude Trichet phased out some of the emergency measures used to fight the global financial slump even as the Greek fiscal crisis threatens to undermine the euro region’s recovery.
The ECB tightened the terms of its regular three-month market operations and will now offer the funds at a variable rate, returning to its pre-crisis stance.
At its main seven-day operations, the ECB will continue to lend commercial banks as much money as they need at its benchmark rate. The ECB left that rate at a record low of 1pc today.
“With today’s decisions, the Eurosystem continues to provide liquidity support to the banking system of the euro area at very favorable conditions,” Trichet said.
“In order to counter effectively any threat to price stability over the medium to longer term, the liquidity provided will be absorbed when necessary.”
On Greece, Trichet said he “welcomes” the steps announced by the government yesterday to cut its budget deficit.
The euro was little changed after Trichet’s comments, trading at $1.3681 at 3pm in Frankfurt.