Trichet says euro zone still seeing significant growth, unlike US economy

FRANKFURT (Thomson Financial) - European Central Bank president Jean-Claude Trichet said the euro zone economy is still experiencing significant ongoing growth and is not in the same situation as the US economy.

"Our economy fundamentals are sound and we think that we have an ongoing growth, which is significant. Even if the risks for the real economy lie on the downside," Trichet said in an interview with four Japanese media organisations.

"The European economy is not the US economy and both sides of the Atlantic are not in the same situation," Trichet said in the interview with Nikkei, Kyodo News, Yomiuri Shimbun and Nippon Hoso Kyokai.

The ECB published a text of the interview on its website.

Trichet said recent euro zone economic data have been mixed.

"We had...some economic news in the euro area that are going on the downside in a number of cases but in other cases -- I shall give you a few examples -- we see positive figures. Recently industrial production was a little bit better than before. We have seen the Ifo institute of Germany releasing a better index than was foreseen," he said.

And he said lending to businesses continues to grow strongly despite tighter credit conditions.

Meanwhile, a slowdown in the US economy is now "very, very probable", he said.

Trichet reiterated that the ECB governing council did not discuss the possibility of a rate hike or of a rate cut at its meeting last Thursday.

A rate hike had been discussed at the previous council meeting in January, and markets have interpreted the shift as signalling that there is no longer any possibility of a rate hike and that the ECB's next move will be a rate cut.

But Trichet indicated that markets may have overreacted to his remarks, and said the ECB remains focused on containing inflationary pressures.

"As I said publicly, we have had inside the governing council, no call for an increase in rates, which has been noted with great attention. But equally no call for a decrease of rates, and we will in the future do whatever is necessary to solidly anchor inflation expectations and we know that in so doing we pave the way for sustainable growth and job creation," he said.

He said the idea that council members had an unofficial discussion about a rate cut at last week's meeting would be "a wrong interpretation".