Jean-Claude Trichet will retire as European Central Bank president next October with the euro area still needing record-low interest rates, according to economists who accurately predicted the region’s monetary policy this year.
The European Central Bank may refrain from cutting interest rates any further after its pledge to buy government bonds lowered borrowing costs and boosted confidence that the euro area can emerge from recession next year.
European Central Bank council member Axel Weber said the ECB should help banks through end-of-year liquidity tensions before determining in the first quarter when to withdraw emergency lending measures.
Greece headed for a cliffhanger vote on austerity measures needed to keep the bailout on track as a 48-hour general strike began and European officials squabbled over the timing of a deal to unlock rescue funds.
European Central Bank officials may have more scope to cope with a Greek restructuring than they are letting on even as policy makers warn that such a move could trigger the beginning of a “horror story.”