Did I detect a slight fin de siècle feel to Jean-Claude Trichet’s comments in Jackson Hole? The European Central Bank president did not talk about monetary policy – he is in “purdah” ahead of next Thursday’s ECB council meeting (and, anyway, would not have wanted to distract from Ben Bernanke’s comments). Instead, he talked mostly about the urgency of reducing indebtedness in the private and public sectors.
But in the last part of his speech – entitled “central banking in uncertain times: conviction and responsibility” – Mr Trichet took a philosophical approach to the challenges of heading a central bank at a time of turmoil. It appeared a little like a summary of his time in office. By the time central bankers gather in Jackson Hole next year, it is likely a successor will have been chosen to take over at the ECB when his non-renewable term ends in October 2011.
One observation made by Mr Trichet was that policymakers win praise if they are seen as being effective in combating a crisis that has erupted. But they win little recognition for taking tough decisions that prevent a crisis in the first place. Read more