World Economic Free Fall Over - ECB Chief

Jean-Claude Trichet, president of the European Central Bank, is pictured here during a press conference in Frankfurt Main, Germany, 06 August 2009. The ECB expects the economy to recover in the upcoming year. Photo by EPA/BGNES

The world's economic "free fall" is over but "uncertainty" still remains, European Central Bank chief Jean-Claude Trichet told RTL radio on Friday.

"We are still in a period of contraction of the economic activity," Trichet said, adding: "We are coming out of the period of free fall."

But he warned against being too optimistic.

"The zone of uncertainty in which we have been since the crisis intensified in mid-September 2008 is not yet behind us," he said.

He was speaking a day after the ECB's Governing Council left the key interest rate unchanged at 1.0 %.

Trichet said ECB action since the acute financial turmoil of September 2008 had been successful in staving off a bigger disaster and the central bank's message to euro zone banks was that they should do their job, which was to lend to the real economy.

"To be fair, there has been a severe economic downturn so demand for credit has diminished ... but from our point of view there are still obstacles to the offer of credit, and that's where our message to banks is that they should live up to their responsibilities.

"If we took the decisions we did, it was for the real economy to be adequately financed," he said.

 

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