The ECB is "in a process of adjusting interest rates'' and "this process hasn't ended yet,'' council member Axel Weber said at a conference in Frankfurt today. The ECB, which shelved a planned increase yesterday to leave its benchmark rate at 4 percent, has a "determination to act in the future whenever it is necessary,'' President Jean-Claude Trichet said at the same event.
The ECB and other central banks have pumped more than $400 billion into money markets to smooth lending between commercial banks. At the same time, the ECB has refused to shift its focus from fighting inflation as economic growth and declining unemployment leave companies with room to raise prices and wages.
Policy makers must "stay continuously vigilant'' on inflation, Juergen Stark, who heads the ECB's economics department, said at the same conference. Luxembourg's Yves Mersch said rates still support economic growth and Finland's Erkki Liikanen said there are "upside risks to price stability.''
The ECB yesterday added 42.2 billion euros ($57.7 billion) in emergency cash as the U.S. housing slump threatened to curb economic growth. The collapse of the U.S. subprime-mortgage market has made banks reluctant to lend, pushing up the cost of credit and causing turmoil on world financial markets.
Trichet today said "the high-level of uncertainty'' makes it "appropriate to gather additional information and to examine new data before drawing further conclusions for monetary policy strategy.''