Trichet: "Bomaanslagen Madrid niet van invloed op vertrouwen" (en)

EUOBSERVER / BRUSSELS - The President of the European Central Bank (ECB), Jean-Claude Trichet, today (1 April) gave a bullish assessment of the economy in the euro zone and said that the terrorist attacks in Madrid had had "no major impact" on confidence.

Speaking to journalists after the monthly meeting of the ECB - at which interest rates were left at a historic low of two percent - Mr Trichet said, "preliminary information available after the tragic events in Madrid on 11 March does not suggest a major impact on confidence".

He added that this situation was "reassuring" and the comments are also likely to reassure the markets which will analyse his remarks closely.

Overall, Mr Trichet's tone was upbeat, concluding, "on balance, there is currently no evidence challenging the assessment of continued, though modest, real GDP growth in the euro area over the short term".

Mr Trichet's confidence was interpreted by the markets as a sign that interest rate cuts will not come in the near future.

The markets are now pricing in a cut in rates towards the middle of the summer.

Disappointment for some

The ECB's decision to leave rates on hold, however, is likely to disappoint many market players and also some member state governments.

Comments from some members of the ECB in recent weeks had led some analysts to predict a cut in rates at this month's meeting and the governments of France and Germany in particular have been calling for an interest rate cut to boost flagging growth.

But calls to reduce borrowing costs have become significantly less vocal since last month's meeting after Mr Trichet firmly emphasised the bank's independence and the euro has fallen against the dollar, reducing pressure to cut rates.

The bank has now held rates for 10 consecutive months and it is a question of when, not if, they will cut interest rates.

New Spanish board member

The ECB also announced formally that they approved the appointment of Spaniard Jose Manuel Gonzalez-Paramo to the bank's executive board.

"Mr Gonzalez-Paramo has recognised standing and professional experience in banking and economic matters as required by the bank", said ECB vice-president Lucas Papademos.