ECB mandate on inflation 'clear'

The European Central Bank's (ECB) mandate to keep a lid on inflation is clear and valid at all times, the bank's president, Jean-Claude Trichet, said in an interview.

"Our mandate is clear: Maintain price stability in the medium term and be credible in this exercise in a way that inflation expectations are firmly anchored," he told the Spanish newspaper El Pais. "This is valid under any circumstances."

Trichet added his remarks should not be taken as a signal on interest rates as he and other ECB committee members are in a blackout period prior to their June 5 rate setting meeting.

Economists polled by Reuters this week do not expect the bank to change interest rates next week from their current four per cent, where they have been since June last year.

Asked if the euro could substitute the dollar as the world's currency of reference within 10 years, Trichet said: "I have never campaigned in favour of the euro's international use."

Trichet addressed the issue of greater financial market regulation, which many politicians and commentators are pushing for in the wake of global economic turmoil triggered by the US subprime mortgage crisis and the global credit crunch.

He said if self-regulation was appropriate and effective it should be adopted: "I think there are areas where we could have self-regulation. It seems to me we should not rule out the possibility beforehand."

"If the authorities consider that the codes of good practice are insufficient to provide financial stability, or if the private sector is incapable of agreeing the necessary code voluntarily, then it is clear that we would see a case for public regulation," he said.

"Transparency is essential." European politicians on the left are frustrated that the European Commission -- which has sole right at European Union level to propose financial regulation -- has largely opted for industry-led solutions to rectify flaws highlighted by market turbulence. The world's top financial groups plan to unveil a set of voluntary guidelines in July in a bid to influence regulators' response and prevent a repeat of the credit crunch. (Reuters)