European Central Bank President Jean-Claude Trichet said today there has been no fundamental change to the outlook for price stability in the euro area, although the bank remains concerned about excessive movements in the exchange rate.
Speaking at a press conference after the ECB elected to hold its key interest rate steady at 2 per cent, as expected, Mr Trichet said inflationary risks should be contained by more favourable import price developments while the economic recovery should proceed "in line with our expectations".
Interest rates therefore remain appropriate, he said. "We will continue to monitor carefully all developments that could affect our assessment of risks to price stability over the medium term," Mr Trichet said.
"With regard to exchange rates, we again particularly stress stability and remain concerned about excessive exchange rate moves."
Mr Trichet said the ECB shares the concerns of the European Commission about the Stability and Growth Pact regarding the conclusions of the ECOFIN Council in November last year.
"The Commission is the guardian of the Treaty and the ECB respects the Commission's decision to seek legal clarity," he said.
"Furthermore, we do not see a need to change the Treaty and, in our view, the stability and growth pact in its current form is appropriate."