Trichet says global central bankers united in inflation fight

European Central Bank President Jean- Claude Trichet said
the world’s central bankers are united in fighting inflation fueled by surging
commodity prices and fast- growing emerging economies.

“There is a solid unity of purpose of all central bankers
concentrated on solidly anchoring inflation expectations,” Trichet said today
in Basel, Switzerland
after chairing the Global Economy Meeting. The global economic recovery has
been “confirmed” and there is “potential for real overheating in emerging
countries,” Trichet said.

Global rate setters are growing more concerned about
inflation as the world economy gathers strength and food and oil prices
increase. The ECB raised interest rates last month for the first time in almost three years. Central banks in
the Philippines, Malaysia
and India also tightened borrowing costs last week.

Oil has gained 10 percent this year after unrest in the
Middle East and North Africa toppled leaders in Tunisia and Egypt before
spreading to Libya, Algeria, Bahrain, Iran, Oman, Syria and Yemen.

“Our colleague from Saudi Arabia mentioned
that Saudi Arabia is standing ready to supply appropriately the market,”
Trichet said.

The surge in commodity prices is “an issue of great
importance” because “it has a direct impact on CPI inflation all over the
world,” Trichet said. “It calls for avoiding second-round effects and anchoring
inflation expectations.”

The International Monetary Fund on April 11 forecast inflation in advanced economies will
average 2.2 percent this year and 1.7 percent next. It predicted inflation in
developing and emerging economies will average 6.9 percent this year and 5.3 percent
in 2012.

Oil prices posted their biggest weekly decline since 2008
last week on concern the global recovery would be weaker than expected.

“There is at this stage no sentiment that there will be a
double-dip” recession, Trichet said. “We also see no reason for being
complacent in any respect.”

The Washington-based IMF predicts growth in the world
economy will accelerate to 4.5 percent in 2012 from 4.4 percent this year.
While advanced economies will expand 2.4 percent this year, developing nations
will grow 6.5 percent, driven by strong expansion in China and India, the IMF predicts.

Trichet urged governments in developed countries to reduce
budget deficits and return to sustainable fiscal policies.

“It is an absolute necessity of the advanced economies to
have wise fiscal policies, which was one of the issues we considered important
at a global level,” he said.

Trichet met in Basel with his counterparts from
the world’s largest central banks including Federal Reserve Vice Chairman Janet
Yellen, Japan’s Masaaki
Shirakawa and Germany’s Jens
Weidmann. The meeting is held every two months under the auspices of the Bank
for International Settlements, which oversees central banks.

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