Trichet notes negative growth forecasts for 2009

The European Central Bank has noted forecasts for the euro zone economy to contract in 2009 but is waiting for central bank staff…

The European Central Bank has noted forecasts for the euro zone economy to contract in 2009 but is waiting for central bank staff projections, ECB President Jean-Claude Trichet was quoted as saying this morning.

Mr Trichet told Egypt's Al Ahramnewspaper that "we will see" what the Eurosystem staff projections show when updated growth and inflation forecasts are published on December 4th, when the ECB is also expected to cut rates by 50 basis points to 2.75 per cent.

"Negative figures for growth in 2009 are gradually appearing," he said, when asked how long the recession would last, although noting that a pickup was expected later.

The OECD expects the euro zone economy to contract 0.6 per cent in 2009, and the International Monetary Fund sees a shrinkage of 0.5 per cent.

Mr Trichet, who is on a visit to Egypt, also said the ECB stands ready to provide financial markets with liquidity in the short term to face the global financial crisis.

"In light of the exceptional circumstances we are prepared to take any necessary measures to provide liquidity in the financial markets in the short term," the newspaper quoted him as saying.

Reuters