Screen grab of video feed of European Central Bank President Jean- Claude Trichet addressing a press conference in Frankfurt, Thursday, August 05, 2010.

European Central Bank President Jean- Claude Trichet said today that Europe is recovering faster than forecast and money markets are improving, setting in train the opportunity for the ECB to phase out emergency liquidity measures used to fight the financial crisis. Meanwhile, German manufacturing orders surged in June.

“The available data for the third quarter are better than expected,” Trichet told a press conference in Frankfurt today after the ECB’s Governing Council kept its benchmark rate at a record low of 1%. “The market is functioning a little bit better.” The ECB’s main rate is still “appropriate,” he said, signalling that there is no urgency to tighten policy.

Three years ago, the term 'credit crunch,' entered the financial lexicon. Defined as "a severe shortage of money or credit", on August 09, 2007 French bank BNP Paribas triggered sharp rise in the cost of credit, and made the financial world realise how serious the situation was. In response, the ECB  swung into action by pumping €95bn into the Eurozone's inter-bank market and added a further €108.7 billion in succeeding days.

Trichet said: "Looking further ahead, and taking into account temporary effects, the Governing Council continues to expect real GDP to grow at a moderate and still uneven pace over time and across economies and sectors of the euro area. Ongoing growth at the global level and its impact on the demand for euro area exports, together with the accommodative monetary policy stance and the measures adopted to restore the functioning of the financial system, should continue to support the euro area economy. However, the recovery in activity is expected to be dampened by the process of balance sheet adjustment in various sectors and labour market prospects."

At the conclusion of the conference, the ECB president noted that he had not received any question on Greece, even though a joint EU/ECB/IMF mission to Athens, to review progress on Greek reforms, reported today. No news is often said to be good news! 

Introductory Statement

Germany's Economics Ministry today reported that manufacturing orders in June were 3.2% higher on a seasonally adjusted basis than the previous month.

June's rise in orders, including demand for planes and trains, supported an increase of 7.7% from the first three months of the year, the Economy Ministry said.

Today's figures showed a 0.3% rise in domestic orders and a 5.7% increase in export orders. May's fall in orders was revised to a 0.1% drop from a fall of 0.5% previously reported.