G-10
European Central Bank President Jean- Claude Trichet, who chaired a meeting of central bankers from the Group of 10 industrialized nations today, said the world economy continues to grow and inflation risks are significant.
“We see ongoing growth at a significant level, but somewhat lower than in the previous year,'' Trichet said at a press conference in Basel, Switzerland. “Inflation risks are significant,'' he added, because of the increase in commodity prices, which he described as “a very important phenomenon on a global level.''
Economic growth in emerging markets such as China, India and Russia has increased demand for commodities, pushing up inflation. Worldwide, food prices in March were 57 percent higher than a year earlier, according to the United Nations, and oil prices hit a record $119.93 a barrel last month. Still, the International Monetary Fund cut its forecast for global growth this year, citing the fallout from the collapse of the U.S. housing market which has pushed up borrowing costs globally.
“We had indications that markets were going better, but still we had the observation of tensions on the money markets,'' Trichet said. There's “no time for complacency in any respect for central banks.''
Money Markets
Money-market rates began surging last year as the fallout from the U.S. housing slump left banks wary of lending to all but the safest borrowers. The central banks of the U.S., the euro region, the U.K., Switzerland and Canada started a concerted program of cash auctions in December to revive lending as the credit shortage threatened to undermine economic growth.
Trichet said the increase in food prices was “one of the issues we mentioned constantly,'' in addition to inflation risks stemming from the rise in other commodity prices paydayloans 1500 payday loans.
The price of rice has doubled in the past year and wheat has climbed 65 percent. The price of crude oil has increased 78 percent. Last month, the International Monetary Fund estimated that inflation in advanced economies would accelerate to 2.6 percent from 2.2 percent in 2007. The fund also cut its global growth forecast for this year to 3.7 percent from 4.1 percent.
Food and agricultural product inflation was “perceived in all economies without exception,'' Trichet said. “From that standpoint, the anchoring of inflation expectations in line with price stability is very important in all countries.''
At the same time, Trichet voiced optimism on economic growth. “Thanks to remarkable, confirmed resilience of a great number of emerging economies we see ongoing growth.''
The IMF forecast growth to average 9.3 percent in China this year and to average 6.8 percent in Russia while world output is estimated to be at 3.7 percent.
When asked whether he was calling on countries with big current account deficits to let their currencies appreciate, Trichet said: “We did not discuss the exchange markets.''
Trichet, 65, met with his counterparts from the world's largest central banks. The G-10 meeting is held every two months under the auspices of the Bank for International Settlements, the central bank of the world's central banks.
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