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Trichet denies ECB bowed to pressure on bond buys


BASEL, Switzerland, May 10 (Reuters) - The European Central Bank was not pressured into buying government bonds by politicians, President Jean-Claude Trichet said on Monday, revealing nothing on the size of the planned purchases. Speaking to journalists during meetings at the Bank for International Settlements, Trichet said the ECB and national central banks would do what was necessary in their unprecedented bond-buying program, but gave no indication of how much they were prepared to spend. He also said the decision was not unanimous, describing it as being carried by an "overwhelming majority" of the bank's Governing Council. Trichet hit back at criticism that the ECB had bowed to political pressure by buying bonds, a process he confirmed had started this morning. "We are fiercely and totally independent. This decision is the decision of the Governing Council and not the result of any kind of pressure of any sort," he said. Asked if economists' estimates of purchases of 200-300 billion euros were reasonable, he said: "The Governing Council will decide on the scope of the interventions. At this stage we will do what is necessary." He said dysfunctional markets disrupted the impact of monetary policy on the real economy and euro zone governments' commitment to meet their fiscal targets was "absolutely crucial". Trichet stressed the ECB would mop up extra liquidity it added through its purchases in order to keep the monetary policy stance at the current appropriate level and said taking term deposits would be a simple and effective option. He declined to give details on how euro zone central banks would divide their purchases. In his capacity as chair of talks on the global economy at the BIS meeting, Trichet said central bankers thought global growth was picking up, particularly in emerging economies. "I would say that we have the feeling that the global recovery is not only confirmed but has some elements at the global level of acceleration," he said, although this also carried risks. "We have a number of economies where we clearly see the risks for inflation are on the upside, that is not surprisingly the case where growth is particularly active and buoyant." (Reporting by Krista Hughes and Sven Egenter; Editing by Toby Chopra) Keywords: EU GREECE/ECB TRICHET (krista.hughes@reuters.com; +49 69 7565 1313; Reuters Messaging: krista.hughes.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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