The European Central Bank (ECB) will do its utmost to restore confidence in the economy, president Jean-Claude Trichet said yesterday, hinting at further emergency measures to spur lending.
“Central banks must do all they can to restore, preserve and foster confidence among households and corporations in order to pave the way for sustainable prosperity,” he said in a speech to an economic think-tank here.
But he said the ECB must tread a fine line between doing too little or too much.
“We must maintain the appropriate balance between the need to take action that is commensurate with the gravity of today’s situation and the equally essential obligation to return to a path that is sustainable in the medium to long term,” he said.
Trichet indicated that the bank might unveil unorthodox monetary policy measures at next month’s meeting of the governing council.
“In our economy banks play such a dominant role that non-standard measures need to be implemented first and foremost through the intervention, and with the active participation, of banks,” he said.
The ECB has so far resisted pressure from financial markets for so-called quantitative easing measures to pump cash into the financial system, like those adopted by the US Federal Reserve, the Bank of England and the Bank of Japan.
The ECB earlier this month lowered its key lending rate by a quarter point to a record low 1.25 percent and Trichet said at the time that a further “measured” reduction in borrowing costs was possible.
Trichet reiterated his view that this year would be “a very difficult year” but that there should be a recovery next year.
In Japan, the central bank cut its economic evaluation in seven of the country’s nine regions, saying companies and consumers were spending less as the recession deepened.
The Bank of Japan said the regional economy has been “deteriorating significantly,” lowering its overall assessment in a quarterly report released in Tokyo yesterday.
Bank of Japan Governor Masaaki Shirakawa said that weaker outlays by businesses and households would prolong the recession even as exports and production start to improve.
Shirakawa told the branch managers that companies were less willing to spend because profits were falling more steeply than before. Consumer spending was weakening because households were facing declining wages and job cuts, he said.
Global financial markets remain under “severe strain” and Japanese companies both large and small are struggling to obtain funding, the governor said.
Some indications of a recovery are emerging. Consumer confidence rose to a five-month high last month, Japan’s Cabinet Office said yesterday, as the government began handing out cash to households as part of stimulus measures and the Nikkei 225 Stock Average rebounded from a 26-year low.
The US Federal Reserve said in its Beige Book this week that the US contraction eased across several of the biggest regions last month, with some industries “stabilizing at a low level.”
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Five flights have been arranged to help nearly 2,000 Taiwanese tourists return home from Okinawa after being stranded due to cruise ship maintenance issues, the Ministry of Transportation and Communications announced yesterday. China Airlines Ltd (中華航空), and EVA Airways Corp (長榮航空) have arranged five flights with a total of 748 additional seats to transport 1,857 passengers from the MSC Bellissima back to Taiwan, the ministry said. The flights have been scheduled for yesterday and today by the Civil Aviation Administration, with the cruise operator covering all associated costs. The MSC Bellissima, carrying 4,341 passengers, departed from Keelung on Wednesday last week for Okinawa,
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