Bloomberg News

Trichet Says Low Inflation in Eastern Europe a ‘Challenge’

October 21, 2011

Oct. 21 (Bloomberg) -- European Central Bank President Jean-Claude Trichet said anchoring low inflation in central and eastern European countries remains a “challenge” and sound fiscal policies are needed as they converge with Western Europe.

“While all countries have reduced inflation to moderate levels, the entrenchment of a low inflation environment still constitutes a challenge in many economies,” Trichet said at an event in Warsaw today, according to a text of his remarks.

Countries in central and eastern Europe have seen budget deficits widen and inflation accelerate following the global financial crisis. In Poland, the region’s largest economy, inflation has stayed above the central bank’s 2.5 percent target for the past 12 months.

Trichet added that countries ultimately wishing to join the euro need to pursue sound fiscal and economic policies.

“Achieving sustainable convergence requires the conduct of sound economic policies, both before and after adoption of the euro,” he said. “The present global crisis is demonstrating, once again, to which extent continuous resolute sound macro policies are the best way to improve economic and financial resilience in times of unexpected challenges and shocks.”

--Editor: Fergal O’Brien

To contact the reporters on this story: Jeff Black in Frankfurt at jblack25@bloomberg.net; Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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