FRANKFURT (Reuters) - Following are comments by European Central Bank President Jean-Claude Trichet at a news conference held after the bank's Governing Council kept interest rates at a record low of 1 percent on Thursday.
ASKED IF TRANSMISSION MECHANISM DISRUPTION HIGHER THAN A
MONTH AGO
"We had envisaged that we could be back to, I would say, tenders. So this is a matter of judgment for you, but it seems to me that it means that we judge the situation not exactly as we would have considered (it) if we had gone back to these tenders."
SMP PROGRAMME IS NOT QE
"It is not quantitative easing. We are withdrawing all the liquidity that we are injecting, as you know."
NEED FOR LEVEL PLAYING FIELD
"(It is) extremely important that we continue to have an interconnected global finance, but also with a level playing field with fair treatment and with the absence of going back to ... some kind of inward-looking in all various marketplaces.
"We need fair treatment. We need open and fair treatment and I think that it is really what we are doing at a normal level, as you know. It is the doctrine that we have, to have the same rules everywhere, to apply the same rules to all those who are participating.
ASKED ABOUT MARKET TURMOIL
"I say we are constantly alert. We are constantly looking at the situation of the markets and at the acute tensions that I was mentioning in the introductory remarks."
ASKED IF IRELAND FORCED INTO TAKING ASSITANCE TO HELP EURO
"I would only say that it goes without saying that it has been the decision of the government of Ireland, and that all those who have discussed with the government of Ireland concluded that it was necessary, of course, to engage in this adjustment program."
ASKED IF BOND-BUYING PROGRAMME IS TEMPORARY
"They are temporary because ... they are commensurate to the absence of normal functioning of a number of markets -- some market segments -- but I confirm that I said ... very clearly that they are temporary in nature."
ASKED IF LIQUIDITY, BOND-BUYING DECISIONS, UNANIMOUS
"As regards the decision we have taken, I would say that we have consensus for the decision we took on the three months and we have the overwhelming majority, I will always refer to, as regards the SMP. And let me only say that what counts, of course, is the Governing Council."
BOND-BUYING PROGRAMME
"The Governing Council considers that, as I said two days ago, that the SMP (Securities Market Programme) is ongoing."
IRELAND
"(The ECB) welcomes the economic and financial adjustment program, which was agreed by the Irish government following the successful conclusion of the negotiations with the European Commission in liaison with the ECB and the International Monetary Fund.
"The program contains the necessary elements to bring about a sustainable stabilization of the Irish economy. It addresses in a decisive manner the economic and financial causes underlying current market concerns and will thereby contribute to restoring confidence and safeguarding financial stability.
"The Governing Council welcomes the commitment of the Irish public authorities to take any further measures that may become appropriate to achieve the objectives of the program."
MAJOR REFORMS NEEDED
"Substantial and far-reaching structural reforms should be rapidly implemented to enhance the prospects for higher sustainable growth.
"Major reforms are particularly necessary in those countries that have experienced a loss of competitiveness in the past or that are suffering from high fiscal and external deficits. The removal of labor market rigidities would further support the adjustment process of these economies."
NEED FOR MULTI-YEAR FISCAL CONSOLIDATION
"All euro area countries should pursue ambitious and credible multi-year consolidation strategies and implement fully the planned corrective measures focusing on the expenditure side. In their 2011 budgets, countries need to specify the necessary fiscal-adjustment measures in detail, while standing ready to correct any slippages from the fiscal objectives announced."
REPERCUSSIONS FROM BUDGET PROBLEMS
"While budgetary developments for some euro area countries are more favorable than expected, concerns about unsustainable fiscal positions and their vulnerability to adverse market reactions remain very high for others and have had repercussions throughout the euro area."
BANK LENDING
"Over the past few months, banks have generally stabilized the size of their balance sheets while expanding the provision of credit to the private sector. However, the challenge remains to expand the availability of such credit when demand picks up further.
"To address this challenge, where necessary, it is essential for banks to retain earnings to turn to the market to strengthen further their capital bases or to take full advantage of government support measures when needed for recapitalization."
INFLATION RISKS
"Risks to the outlook for price developments are broadly balanced. Upside risks relate in particular to developments in energy and non-energy commodity prices.
"Furthermore, increases in indirect taxes and administered prices may be greater than currently expected, owing to the need for fiscal consolidation in the coming years.
"At the same time, risks to domestic price and cost developments are still expected to be contained."
INFLATION FORECASTS
"The December 2010 euro system's staff microeconomic projections for the euro area, which will see annual HICP inflation in a range between 1.5% and 1.7% for 2010 , between 1.3% and 2.3% for 2011 and between 0.7% and 2.3% for 2012.
"Compared with the ECB staff projections published in September, the range for 2010 is unchanged, while the range for 2011 is marginally higher. Available forecasts from international organizations provide a broadly similar picture."
INFLATION
"In the next few months, HICP inflation rates will hover around current levels before moderating again in the course of (technical difficulty). Overall, in the period ahead, inflation rates should remain moderate."
NEW GROWTH FORECASTS
"The December 2010 euro system's staff microeconomic projections for the euro area according to which annual real GDP growth will range between 1.6% and 1.8% in 2010, between 0.7% and 2.1% in 2011 and between 0.6% and 2.8% in 2012.
"Compared with the September 2010 ECB staff microeconomic projections, the range for 2010 has narrowed somewhat and shifted toward the upper end of the September range, while the range for 2011 is slightly narrower. The December 2010 euro system's staff protections are broadly in line with forecasts by international organizations."
RISKS TO GROWTH
"In the Governing Council assessment, the risks to this economic outlook are tilted to the downside with uncertainty remaining elevated.
"On the one hand, global trade may continue to grow more rapidly than expected, thereby supporting euro area exports. At the same time, it is to be noted that the level of business confidence in the euro area remains relatively high.
"On the other hand, downside risks relate to the tensions in some segments of the financial markets and their potential spillover to the euro area real economy.
"Further downside risks relate to renewed increases in oil and other commodity prices, protectionist pressures and the possibility of a disorderly correction of global imbalances."
GROWTH EXPECTATIONS
"In line with previous expectations, this implies ongoing real GDP growth in the fourth quarter of this year.
"Euro area exports should further benefit from a continued recovery in the global economy. At the same time, private sector domestic demand should increasingly contribute to growth, supported by the accommodative monetary policy stance and the measures adopted to restore the functioning of the financial system.
"However, the recovery in activity is expected to be dampened by the process of balance sheet adjustment in various sectors."
LIQUIDITY MEASURES
"The Governing Council today also decided to continue conducting its main refinancing operations and the special term refinancing operations with maturity of one maintenance period as fixed-rate tender procedures with full allotment for as long as necessary and at least until the end of the third maintenance period of 2011 on April 12, 2011.
"Furthermore, the Governing Council decided to conduct the three months longer-term refinancing operations, the LTROs, to be allotted on January 26, February 23 and March 30, 2011 as fixed-rate tender procedures with full allotment.
"The rates in this three months operations will be fixed at the average rate of the MROs over the life of the respective LTRO."
RATES APPROPRIATE
"Based on its regular economic and monetary analysis, the Governing Council confirmed that the current ECB interest rates are appropriate."
ECONOMIC UNCERTAINTY ELEVATED
"We continue to expect price developments to remain moderate over the policy-relevant medium-term horizon. Recent economic data are consistent with the positive underlying momentum of the recovery while uncertainty is elevated."