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ECB Chief Trichet Open To Non-Standard Monetary Policy If Markets Crash

Although the speech is focused on about long-term growth, Trichet briefly mentions "non-standard monetary policy" and his willingness to use it if markets deteriorate. He says it would not interfere with price stability. Trichet's interest rate policy, however, does depend on price stability. Finally, a priority for medium and long-run growth is that our policy institutions remain attuned to an ever-changing landscape. We have seen in recent years the near-Knightian uncertainty policy makers endured and how boldly they responded. The ECB was among the first central banks to react to the outbreak of the financial turmoil in August 2007 in providing liquidity to distressed institutions.

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