European Central Bank fighting inflation and credit squeeze: Trichet

0 Comments | AFP, December, 2007

BRUSSELS (AFP) — European Central Bank president Jean-Claude Trichet warned Wednesday that inflation threatened the 13-nation eurozone and stressed that controlled ECB cash injections were meant only to keep credit flowing.

The bank stood ready to fight inflation, he said -- normally by raising interest rates -- while ensuring banks were supplied with cash to ease a credit squeeze that could crimp economic growth.

"I should like to underline -- once again -- that these two responsibilities are clearly distinct and should not be mixed," Trichet told lawmakers at the European Parliament in Brussels.

"We are not pouring in liquidity," he added, because funds supplied to commercial banks were paid back within set periods, usually no more than three months....