MercoPress. South Atlantic News Agency

Central bankers admit growth slowdown but no sign of world recession

Jean-Claude Trichet, speaking as chair of talks at the Bank for International Settlements meeting in Switzerland

Economic growth is slowing but there is no sign of a worldwide recession, according to global central bankers who said they had no plans for concerted action.

Central banks stood ready to provide liquidity as needed and there was no sign of deflation in developed economies, Jean-Claude Trichet, speaking as chair of talks at a Bank for International Settlements meeting, also said.

“We don't see a recession on the cards at all but we see a slowing down in comparison to what has been observed in the recent period,” Trichet told journalists at a news conference.

“We see also downside risks in a degree of slowing down in the global economy have augmented during the recent period.”

Trichet said the world's central bankers were in frequent dialogue and were united in purpose, though this would not necessarily mean they adopted identical policy actions.

“We are in a permanent consultation,” he said. “We have all our responsibilities; we are not in the same universe.”

Turning to the European Central Bank, which he heads, Trichet said its decision to buy sovereign bonds had not dented its credibility.

“We have a great level of credibility that we will preserve in all circumstances that we have done since the start of this crisis,” he said.

Highlighting how precarious the situation in the euro zone is, Greece confirmed on Monday that it has cash for only a few more weeks.

Trichet called on decision-makers to implement rapidly and comprehensively decisions that had already been taken, including the July 21 move to provide Greece with a second bailout.

International lenders threatened last week to withhold the sixth bailout payment of about 8 billion Euros because of Greece's repeated fiscal slippage. Trichet said it the working assumption was that Greece would satisfy EU and IMF inspectors.

“All institutions are calling on the Greek government to fully deliver on its commitments,” Trichet said.

When asked about whether the SNB's decision to cap the Franc at 1.20 per Euro had been discussed, Trichet answered: “There was explanation and I would say understanding by the global economy meeting”.