MercoPress. South Atlantic News Agency

ECB reiterates commitment to “price and financial stability”

The European Central Bank will do its job to preserve price stability, ECB governing council member and president of Germany's Bundesbank Axel Weber reiterated Friday.

"We will always do all that is necessary to preserve price stability," Weber said on the sidelines of a press briefing. However Weber declined to comment on whether the ECB would stay the course and raise interest rates in September as planned. Following the August 2 policy meeting ECB President Jean-Claude Trichet said the council would use "vigilance" in assessing price risks - a word used to herald all of the ECB's eight rate increases since the start to policy tightening in December 2005. Earlier Friday, Weber declined to say that the council would use "vigilance" on price risks. Some ECB-watchers concluded from this that an interest rate hike is off the table for now, but others gave it a softer interpretation - that the council will have to meet again to deliberate before confirming a September hike. Weber also emphasized that in addition to price stability it is also important for the ECB to do its part in ensuring financial stability. He was probably referring to recent money-market liquidity injections by the ECB to ease anxieties. "The Euro is as stable as the Deutsche Mark, and this will stay that way" underlined Weber who nevertheless declined to comment on current market conditions except to say that there is "recognizable" market volatility. Earlier in the week ECB president Jean-Claude Trichet said the bank would "provide in particular the liquidity which was needed to permit an orderly functioning of the money market". Trichet described the situation as one of market nervousness, "a period in which we see increased volatility in many markets and a significant re-appreciation of risks. In some respects, what has been observed can be interpreted as a normalization of the pricing of risk". The ECB is estimated to have pumped over 200 billion US dollars into the financial system during the last week.