ECB's Trichet: Avoided Deflation, Banks Must Focus On Balance Sheets

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The European Central Bank has avoided the materialization of deflationary risks thanks to its solid anchoring of inflation expectations, the bank's President Jean-Claude Trichet said.

"We can tell our 330 million fellow citizens: you can have confidence, we will deliver price stability," he promised in an interview with Dutch newspaper Financieele Dagblad.

Trichet said European banks should reinforce their balance sheets by issuing stocks, by putting their profits into reserves instead of paying dividends and remunerations. "The financial sector must understand that it has to respect values that are acceptable by the society at large," he said. The central banker said sustainability of public finances in the medium term will reinforce confidence of households and corporate business. The recovery can only succeed if confidence improve.

The European Central Bank has avoided the materialization of deflationary risks thanks to its solid anchoring of inflation expectations, the bank's President Jean-Claude Trichet said. (Market News Provided by RTTNews)