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"We still are in a market correction," Trichet said at the Kansas City Federal Reserve Bank's annual monetary policy conference that draws central bankers, economists and business people from around the world.
"What has been done until now has been pretty well done, it seems to me, under those very difficult circumstances," he said, responding from the conference audience to a paper critical of the reactions of the U.S. Federal Reserve, the ECB and the Bank of England to financial turbulence.
The annual conference took place as market and economic conditions remain gloomy amid persistent worries about bad credit, inflation, sluggish growth and high energy and commodity prices.
"This turmoil is not going to go away quickly and will require serious efforts to overcome it," a top official of the International Monetary Fund, John Lipsky, told Reuters.
The forum has focused on fallout from the financial crisis that erupted in 2007. In the conference keynote address on Friday, Fed Chairman Ben Bernanke said the year-long financial storm "has not yet subsided."
The
"The stimulus helped to support consumption in the middle part of this year," Congressional Budget Office head Peter Orszag told Reuters. "One of the things we'll be experiencing later this year is the withdrawal of that effect, leading to economic weakness."
Initial
At the symposium, a former Bank of England official, Willem Buiter, took the BoE, the ECB and the Fed to task for their responses to the crises that began last summer as the extent of problems resulting from risky subprime mortgages -- loans made to borrowers with spotty records of repaying debts -- became known.
Buiter in a paper presented at the symposium directed his harshest critique at the Fed, saying the
Fed Governor Frederic Mishkin, however, said the
"When you can get an adverse feedback loop ... that argues that what you need to do is act more aggressively," he said in response.
The ECB, in contrast to the Fed, has raised rates, citing worries about record euro zone inflation.
A European policy-maker said at the Fed conference it was premature to declare that falling oil prices would curb euro zone inflation.
"We will have to see where it will go. It is too early to give a comment on that," ECB governing council member Yves Mersch told Reuters.
Meanwhile, another paper said the European Union urgently needs a better plan to share the costs of dealing with large bank failures to prevent the risk of a severe "contagion effect."
Economists Franklin Allen and Elena Carletti said that without clearer guidelines, European and global capital markets could be at risk.