Trichet sees upside inflation risks, downside growth risks

[ASusilovic]

European Central Bank President Jean-Claude Trichet pointed to the central bank's dilemma in his opening statement following the bank's decision to keep rates at 4% -- upside risks to inflation from energy and food prices and wage deals, and downside risks to economic growth. Financial market tensions still exist, he said.

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[Ivanovich]

Again, if he so much as even hinted to a rate cut, that would cause the dollar to strengthen and (in theory) commodities to weaken. This would in turn lower his inflationary pressures going forward.

By talking up rates, he only reinforces inflation that he so loathes.