ECB president Jean-Claude Trichet said the bank must guard against inflation as it prepares to use unconventional policies to contain the financial crisis, although he left the door open to another interest rate cut.
Mr Trichet did not give details of the unconventional policy response, due to be unveiled on May 7th, and dismissed any suggestion that European Central Bank policymakers were divided over how far the ECB should go.
"When we make a decision on non-standard measures on May 7th, we will explain it to the markets and to investors," he said in Tokyo on Saturday.
Trichet made the risk of inflation the focus of his remarks on the unconventional policy response, saying confidence would not be restored without a strategy to reverse these measures.
"We have to anchor inflation expectations with our definition of price stability. Europeans can look to us as an anchor and have confidence, because we have delivered price stability," he said in a speech.
With the global economy in its worst downturn in decades, inflation is slowing around the world but some investors are worried that huge cash injections by the world's central banks could spark inflation in the future.
Economists are now busy speculating whether the ECB will follow the US Federal Reserve, the Bank of England and the Bank of Japan down the path of asset purchases to revive lending and confidence shattered by bank failures and economic meltdown.
Reuters