European Central Bank chief Jean-Claude Trichet added to uncertainty about euro-zone monetary policy today, saying he would not commit to any interest rate moves before an upcoming policy meeting.
Answering questions after a speech in Budapest, Trichet said his 2 August stance, in which he called for 'strong vigilance' to stem inflation, was articulated prior to recent market volatility.
He said the central bank would wait until its next policy meeting on 6 September before deciding what to do next.
'We will then have to assess all of the elements of the economy,' he said. 'We will assess the risks and will take the appropriate steps at that moment.'
Trichet's remarks added to market expectations that central banks may move to inject more liquidity into financial markets to fend off a credit squeeze that has in recent weeks sent markets into a tailspin.
Earlier this month, both the ECB and Federal Reserve injected emergency funds into the economy to prevent credit markets from seizing up.
However, the ECB also said today that money markets were returning to normal following widespread turbulence produced by a crisis in the US home loan market.
The ECB said in a statement that the gradual end of the credit squeeze meant it would now work to correct a cash surplus that developed on the markets owing in part to its injection of more than €200 billion in recent weeks.
'Consistently with the ongoing normalisation of conditions on the short term of the money market, the ECB continues to aim at gradually reducing the large reserve surplus which has accumulated in the last weeks,' it said.
The central bank for the 13-nation eurozone said it estimated the liquidity needs of banks to cover their reserve obligations in the coming week at €194 billion.
Central banks around the world began a series of major cash injections on August 9 in response to the home loans crisis in the United States.
The US Federal Reserve announced separately today that it was pumping $9.5 billion into the banking system to boost credit flows which evaporated due to the financial storm that hit the mortgage market for high risk borrowers.
The European Central Bank said today that money markets were returning to normal following widespread turbulence produced by a crisis in the US home loan market.
The ECB said in a statement that the gradual end of the credit squeeze meant it would now work to correct a cash surplus that developed on the markets owing in part to its injection of more than €200 billion in recent weeks.
'Consistently with the ongoing normalisation of conditions on the short term of the money market, the ECB continues to aim at gradually reducing the large reserve surplus which has accumulated in the last weeks,' it said.
The central bank for the 13-nation eurozone said it estimated the liquidity needs of banks to cover their reserve obligations in the coming week at €194 billion.
Central banks around the world began a series of major cash injections on August 9 in response to the home loans crisis in the United States.
The US Federal Reserve announced separately today that it was pumping $9.5 billion into the banking system to boost credit flows which evaporated due to the financial storm that hit the mortgage market for high risk borrowers.
