Trichet expects economic recovery in 2010, hints at rate cut in May+

TOKYO, April 19 Kyodo -
European Central Bank President Jean-Claude Trichet indicated that global
economic deterioration shows signs of halting and that the economy may recover
in 2010, repeating that decisions on another interest rate cut and
unconventional measures would come in May.

''In a number of economies, including in Europe, we see that some surveys are
demonstrating that things are not deteriorating more,'' Trichet said in a
recent interview with Kyodo News in Tokyo. ''But that does not change the fact
that 2009 is a very difficult year.''
While the world needs to tackle the ''evaporation of confidence'' amid the
financial crisis, an economic recovery could come ''in the course of 2010,''
helped by lower oil and commodity prices, coupled with the resilience of major
emerging economies, Trichet said.
His comments came as the ECB is trying to shore up the struggling eurozone
economy, which the Organization for Economic Cooperation and Development
expects to shrink 4.1 percent this year.
The head of the ECB reiterated that an additional cut in its benchmark rate is
not excluded, but said bringing it to zero is ''not at all something we would
consider appropriate.''
The central bank trimmed its key interest rate a quarter percentage point
earlier this month to an all-time low of 1.25 percent since the launch of the
single European currency in 1999.
Trichet repeated his earlier remarks that the central bank will decide on
further unconventional measures at its next policy meeting May 7, without
elaborating.
With interest rates close to zero, other central banks are going beyond the
conventional method of cutting interest rates as such policy tools at their
disposal are limited.
In an effort to buoy up the private credit market, the U.S. Federal Reserve and
the Bank of England have begun purchasing government bonds, and the Bank of
Japan is buying commercial paper from financial institutions to provide
liquidity.
Trichet said he appreciates U.S. Fed Chairman Ben Bernanke and Treasury
Secretary Timothy Geithner saying that a strong U.S. dollar is in the interest
of the United States.
==Kyodo