ECB's Trichet focuses on inflation
LONDON (AFP) — European Central Bank president Jean-Claude Trichet voiced concern Monday about the danger of inflation in the eurozone as a "very significant" market correction continued.
"Price stability, and credibility in price stability, in the medium term, is the best way to have a high level of sustainable growth and sustainable job creation," Trichet told the BBC in an interview.
Eurozone inflation eased to 3.3 percent in April after a record spike to 3.6 percent in March but is still way above the ECB's target of close to but just below 2.0 percent.
The ECB has maintained its key interest rate unchanged at 4.0 percent since last June even as the US Federal Reserve has slashed lending costs as it seeks to keep the economy on track in the fallout from the subprime home loan crisis.
That crisis has sparked a wider credit squeeze and a sharp slowdown in the United States, with many in the eurozone arguing that the ECB should be cutting interest rates to bolster slowing growth.
Trichet declined to be drawn when asked if he felt that the worst of the credit crisis had now now passed -- as many analysts and commentators believe -- saying that the markets continue to correct.
"The best description (of the situation that) I can give is that it is an ongoing very significant market correction," he said.
"These are demanding times, challenging times. We have this accumulation of the oil shock and the food and agro-products shock," he warned.
"In the first oil shock, we took the wrong decisions and embarked on second-round effects and tried a high level of inflation for a long period of time.
"We created ... mass unemployment in Europe, when before 1974 we had no mass unemployment."
