Trichet says high inflation a global phenomenon
Soaring food and commodity prices are pushing up inflation all around the world and leave no room for complacency, top policymakers said on Monday after talks at the Bank for International Settlements.
Summing up discussions among central bank officials from developed and emerging economies, Jean-Claude Trichet, who chairs the bi-monthly Global Economy Meeting, said high inflation was a concern worldwide. “Inflation risks are significant under the influence, which is observed by absolutely all economies, of the succession of oil and energy price increases, commodity price increases more generally and food and agricultural products. This is perceived in all economies without exception,” he said. “Food prices (are) one of the issues we mentioned constantly. It is an additional element adding to the energy prices, to the metal prices and a number of commodity prices and that is really at a global level a very important phenomenon,” he told a news conference.
Trichet said that global economic growth should remain significant, with a slowing in industrialized countries in the face of market turbulence offset by confirmed resilience among emerging markets, but policymakers were alert. “Colleagues at a global level considered that this was no time for complacency for central banks in any respect,” he said. Central bankers had noted an improvement in some market segments -- including share prices and credit default swap rates -- but there were still tensions on money markets despite coordinated central bank liquidity action. The tensions could be due to market participants’ desire to hold on to cash reserves despite diminishing credit risk.
Central bankers did not discuss any new action to pump extra funds into markets but cooperation was continuing, he said. The talks also did not tackle foreign exchange rates, although Trichet said Group of Seven (G-7) countries had made their position on currencies clear on previous occasions. The Global Economy Meeting is attended by central bank governors or senior officials of major industrial and emerging market economies. Trichet also chairs the Group of 10 central bankers and is president of the European Central Bank. (Reuters)
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