ECB Fails to Talk Up the Euro

ECB officials stress focus on price risks, despite market turmoil. ECB’s Gonzalez-Paramo said the ECB is not satisfied with the price outlook and remains “alert” over price gains and remaining upside risks to price stability. Meanwhile fellow council member Liikanen said growth and inflation targets are not incompatible and warned that once price expectations are unanchored it gets harder to contain inflation. Liikanen added that he see rising price pressures in the services sector. Separately ECB’s Provopoulos said the global economic outlook is less optimistic, but added that there is no credit crunch in the Euro-Zone. Comments confirm again that while the ECB is willing to add liquidity to aid the interbank market it is not planning to ease monetary policy as a reaction to the crisis. Amid the hawkish commentary, the euro was little changed following the comments, and continues to hold near 1.47