APCOM

In the global world threatened by the financial crisis, the medium-term stability of prices can be achieved by keeping inflation expectations steady and by avoiding the spiral between prices and wages. This is what Jean-Claude Trichet, President of the European Central Bank said, during his inaugural speech at the forum "Economy and open society" dedicated to globalisation. The latter was organised in Milano by the Bocconi University and newspaper Corriere della Sera. "We can't underestimate the risks for the stability of the financial system. Monetary politics has limited power in curbing price shocks like the sudden rise in raw materials" underlined Trichet. "The strong movement of prices, together with globalisation, makes the attention on price stability more important than ever."

According to the 56 year-old Frenchman "the international community must face with resolution those imbalances in order to identify the system's failings and formulate political answers to strengthen it." On this issue, the ECB's number one has praised the "important work carried out by the Financial Stability Forum and its excellent report on the improvement of markets and reinforcement of institutions" which has been recently presented to the G7 by Bankitalia's governor Mario Draghi. Speaking of globalisation, he pointed out that "it would be better to accelerate the global governance rather than slow down the progress of mankind."

In the last ten years, Trichet asserted, the euro-area "has changed the profile of the whole world" but now it's threatened by the constantly rising price of oil, raw materials and food products. The European Central Bank fights this phenomenon by keeping the interest rates at 4%, a level which is "adequate to maintain the prices steady in the medium-term." When asked if, in his opinion, the electoral victory of Silvio Berlusconi could create pressures for a reduction of the interest rates, the governor replied: "We are the currency's guardians, we are non-political, multinational and multi-partner. Besides, we're mobile and at the centre of a consent that has enabled the creation of the Euro and of ECB. We will go on working and following the mission we were entrusted by European democracies, which obviously have some demands in our regard."

At present, explained Trichet, the priority is to "assure the price stability", because it is "a key condition for a healthy and lasting growth and for the creation of new employment", while each government must promote reforms and competitiveness. As for the experts' forecast on the upward movement of the price of crude oil, supposedly destined within two years to trade near 200 dollars a barrel, the ECB's president remarked: "I can just say that the limits we had imagined have been overcome. Both consumers and producers must behave in a responsible way. Nobody has anything to gain from the constant rise of the oil price."