ECBs Trichet Talks Down Interest Cut; Holding Firm: ECBs Jean-Claude Trichet Is Not for Turning. Yet
Byline: JOHN O'HALLORAN
THE eurozones top banker has talked down the chances of a cut in eurointerest rates.
His downbeat message yesterday stressed the need to fight inflation rather thanboost flagging eurozone growth.
Jean Claude Trichets words came after a wave of optimism had swept acrossEurope this week that rates would soon fall.
However, shortly after the European Central Bank president delivered hisScrooge-like message, share markets tumbled across the continent.
Optimism about lower euro rates had been fuelled by the larger-than-expectedcut of 0.75pc in U.S. interest rates earlier this week.
Many analysts in Europe judged that the eurozone would have to follow suit toavoid getting too far out of line.
In the event, Trichets message brought an abrupt halt to the share price risesthat had continued right up to when he spoke. Markets tumbled, their falls morethan wiping out the 2-3pc gains the optimism had prompted earlier in the week.Shares in Paris had dropped 4pc by the close last night, double their gainsearlier in the week.
Shares in Frankfurt also ended 4pc lower. The Dublin market, which had alsoseen big gains on optimism about a rate cut, was less affected, but still ended6.84 points lower at 6,490.03.
Trichets warning also stalled money markets, used by banks for lending to eachother. A slide in their rates over recent weeks came to an abrupt halt, withthe rate for one month even rising slightly to 4. …