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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (22810)	2/3/2005 3:18:25 PM
From: mishedlo	Respond to of 116555

ECB news conference -- At-a-glance guide to the main points Thursday, February 3, 2005 4:36:59 PM afxpress.com FRANKFURT (AFX) - Following are the main points from today's European Central Bank news conference INTEREST RATES -The ECB left its leading interest rates unchanged at today's governing council meeting, as expected. Main refinancing operations will continue to be conducted as variable rate tenders with a minimum bid rate of 2.00 pct -ECB president Jean-Claude Trichet said the central bank's assessment of inflation risks is unchanged from when it last met, on Jan 13 -"All in all, the information which has become available since the last meeting of the governing council means that our assessment of price stability over the medium term is unchanged," he said. ECONOMIC GROWTH -Trichet said recent data suggest growth in the fourth quarter of 2004 was moderate. -But growth should pick up and become more self-sustained in the course of 2005, he said. INFLATION -Euro zone inflation is likely to fall in January, but will probably be volatile over the next few months as a result of oil price developments, Trichet said -But he said the ECB remains confident that inflation will fall below 2 pct in the course of this year -He said there is no significant evidence of underlying domestic inflationary pressures building up in the euro area -But there are still some upside risks to price stability over the medium term and these will require continued vigilance, he said FOREX -Trichet reiterated that the ECB considers volatility in exchange rates "unwelcome and undesirable for economic growth" M3 GROWTH -Trichet said strong M3 growth can no longer be explained by portfolio shifts and must reflect the stimulative effect of the historically very low level of interest rates -This could pose risks to price stability over the medium term and warrants vigilance, he said -While the resulting overhang of excess liquidity will not necessarily lead to inflation in the short term, it will increase inflation pressures in the long run, he said HOUSE PRICES -Trichet said the sharp rises in house prices in some euro zone countries are unwelcome. He rejected the argument that strong house price growth could be positive for consumer confidence -"In some parts of the euro area we see (house price) phenomena that are not, in our view, sustainable and certainly are not necessarily welcome," he said -He said the ECB is not alarmed by house price inflation in the euro zone as a whole, but the rises in some markets require it to be vigilant -And he said central banks have to react to asset price bubbles before they burst, not afterwards BOND MARKETS -Trichet noted that spreads in bond markets are now very low, and said this appears to be symptomatic of an underpricing of some risks -"I will not be alarming but I must observe that we have perhaps an appreciation of risks which is quite low...at the European and global level," he said CITIGROUP BOND TRADING -Trichet called for a thorough investigation into Citigroup's unprecedented bond trading operation last August, when it sold 11 bln eur of euro zone bonds and other securities on the Eurex exchange in less than two minutes. The bank then bought back 4 bln eur of paper on the electronic MTS exchange, turning a 17 mln usd profit -The operation is already being investigated by UK and German regulators -"We have an enormous stake in markets functioning fairly and correctly This is absolutely decisive," Trichet said