European Central Bank President Jean-Claude Trichet comments on monetary policy, growth and inflation in the economy of the 15 nations that share the euro.
He spoke at a press conference in Athens today after the central bank left its key rate at 4 per cent.
On the ECB's mandate: "Our fellow citizens are not happy with the present level of inflation. They consider price stability of extreme importance. They've decided to give us this mandate. All surveys we have everywhere in Europe show that they're calling for price stability. We're faithful to our mandate."
"We trust what we're doing and the decision today will ensure to maintain price stability over the medium term."
On ECB independence: "We have never been alarmed. We have a treaty. The treaty says that we're independent. The treaty says that we can't receive instructions and we can't even ask for instructions. The treaty says that no entity including governments even can try to influence the ECB. If you look at the market participants, observers, investors, they have not a single doubt that we're independent."
On wage settlements: "As far as the governing council is concerned, we've said it's imperative that all parties involved have to meet their responsibilities."
"Moderate labor-cost increases are particularly important in countries which have lost price competitiveness in the last years."
"We recommend all partners including governments not to create additional problems by augmenting administrative prices or augmenting taxes."
"Second-round effects must be avoided. In this context the governing council is concerned about the existence of schemes in which nominal wages are indexed to consumer prices."
"The governing council is monitoring wage negotiations in the euro area with particular attention."
On inflation expectations: "We're following the inflation expectations from a large number of forecasters. From what I see in the domain of the survey of professional forecasters, there's an impact from headline inflation what we're observing today."
"But at this stage I would say that medium- to long-term inflation expectations are in line with our mandate and our definition of price stability. The anchoring of inflation expectations is absolutely essential."
"Alertness is extraordinarily important. There's no time for complacency in any respect," he said.
Bloomberg