Defiant Duisenberg declares he is doing a good job and will not resign

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The Independent Online

Wim Duisenberg, the embattled president of the European Central Bank (ECB), appeared to have saved his skin last night with a robust defence of his recent performance.

Wim Duisenberg, the embattled president of the European Central Bank (ECB), appeared to have saved his skin last night with a robust defence of his recent performance.

Facing the world media for the first time since he committed a gaffe by discussing intervention policy, Mr Duisenberg insisted he was doing a good job and would not resign.

"I realised that some of my recent remarks gave rise to critical comments and certainly have given rise to lots of advice that I have received," he said in response to an invitation from the floor to resign. "I drew my conclusions and I accept that advice and I am not going to answer any questions related to that recent interview.

"As far as interventions are concerned, I confirm our policy that intervention is a tool available to central banks to be used if and when appropriate."

Crucially, Mr Duisenberg received emphatic support from Jean-Claude Trichet, the governor of the French central bank and the man unofficially named as the next president of the ECB.

Mr Trichet said: "We are very proud to be part of the European monetary team. We are a united team and we have great unity and we realise our full responsibility that we exercise behind our president."

Mr Duisenberg was unruffled by repeated attempts by journalists to tease out another gaffe. But despite the bruising three days in the wake of his interview, Mr Duisenberg insisted he remained "as open and transparent as we possibly can be" - including the possibility of more media interviews.

The euro hardly moved on the financial markets after the conference, especially as traders were more anxious to analyse remarks by Alan Greenspan, the chairman of the United States central bank, the Federal Reserve. The currency closed flat at $0.841 in Europe.

City analysts gave Mr Duisenberg's performance a cautious welcome. Alison Cottrell, chief economist at PaineWebber International, said: "He stuck to the script, he got through it and he's still there. But if he makes another presentational slip-up, of course people will refer back to this week. If he never made another mistake this will have been a storm in a teacup."

The ECB president repeated his view that the euro was "seriously undervalued and misaligned". He added: "There will come a moment when that is corrected." In terms of monetary policy, Mr Duisenberg gave a series of hints that there are more interest-rate hikes in the pipeline.

The ECB decided yesterday to leave rates on hold at 4.75 per cent, following its quarter-point rise two weeks ago. Mr Duisenberg said: "Our monetary policy is still accommodative and thereby no hindrance to further growth in GDP and employment."

Figures published on Wednesday showed that inflation hit a six-month high of 2.8 per cent in September, mainly due to the rise in oil prices. Mr Duisenberg forecast that inflation would stay above the ECB's 2 per cent target for longer than had been thought - another sign rates are on their way up.

The warning about the impact of the oil price was echoed by Mr Greenspan. He acknowledged that in terms of inflation expectations, the impact of oil had so far been "virtually nil". He added: "Policy makers will need to be on the alert for all oil-driven risks to our expansion."

While European inflation is still rising there were signs yesterday that the economy is starting to slow. The influential IFO survey of West German business confidence showed another fall - its third in a row.