Trichet Reaffirms Inflation Concerns In Interveiw

In an interview with a Portuguese news station, ECB President Trichet said the central bank’s current policy stance would lead to price stability in the medium-term. The policy maker went on to say the European’s main concern is inflation. With interest rates (and forecasts for rates) falling back across the globe, these comments certainly have a hawkish cut to them. What’s more, with the European Commission recently downgrading 2008 growth forecasts from 1.7 percent to 1.3 percent, and offering forecasts of a recession for Germany, these comments seem unreasonably hawkish.