ECB's Trichet sees low inflation for 10 years: paper

Sun Oct 30, 2011 12:39am EDT
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BERLIN (Reuters) - European Central Bank President Jean-Claude Trichet was quoted by a German newspaper as saying inflation in the euro zone would be "very low" over the next 10 years, with expectations currently for around 1.8 percent.

"In the coming 10 years, the inflation rate will most probably stay very low; current expectations are for around 1.8 percent," he told the mass-selling Bild am Sonntag newspaper, in one of the final interviews of his term heading the ECB.

"This means: in the euro zone we have price stability. This is something we are very proud of, and rightly so, because we have achieved what is expected of us."

Trichet said European governments had made serious mistakes by not sticking to the Stability and Growth pact.

"They did this although the ECB emphatically warned them to follow the criteria."

Trichet, who said he would "certainly remain active" after stepping down as ECB president, called for a change of values in financial markets.

"We should be very aware of the fact that some ways of behavior on markets caused considerable irritation. One such thing is the level of some bonus payments," Trichet said.

"Banks must raise their level of resistance and avoid behavior that is not in cohesion with the values of our society -- including excessive bonus payments."

He said regulatory bodies should ensure financial market innovations served the real economy and did not damage it.   Continued...

<p>Former ECB President Jean-Claude Trichet delivers a speech at the Humboldt University in Berlin, October 24, 2011. REUTERS/Thomas Peter</p>