BASEL, Switzerland — Rich countries like the U.S., Japan and Britain need to move quickly to get their deficits under control, the head of the European Central Bank said Monday.
Speaking on behalf of the world's major central banks, Jean-Claude Trichet said governments' financial situation in the developed world "has to be aggressively improved."
Rich countries have seen debts and deficits rise due to the financial crisis, recession and bank bailouts. In Europe, Greece, Ireland and Portugal have needed international rescue loans to deal with their debt crises.
"The fiscal situation, particularly in the advanced economies, is an issue which is important as far as the global economy is concerned," Trichet said.
"That is true for all of us, including of course in Europe," he added.
The top central bankers meeting at the Bank for International Settlements in Basel, Switzerland, agreed that the global recovery is solidly under way despite "ups and downs," said Trichet, who chairs the group.
Besides deficits, the chief risks are volatile oil prices and potential economic overheating in the developing world.
High energy prices threaten to worsen inflation, he said, and governments and central banks need to be on guard. The European Central Bank has already started raising interest rates, moving its key rate to 1.25 percent from 1 percent in April to avoid a wage-price spiral in Europe. Eurozone inflation has reached an annual 2.8 percent, above the bank's goal of just under two percent.Comment on this story
The Federal Reserve and the Bank of England have not yet started moving rates up from record lows, a step that would be aimed at preventing worsening inflation.
Volatile oil "has a direct impact on CPI inflation all over the world," said Trichet, using the acronym for consumer price index. "It calls for avoiding second-round effects and solidly anchoring inflationary expectations."
He said all central bankers were "concentrating on solidly anchoring inflation expectations."
Another worry was overheating in some emerging economies. Trichet said the bankers' advice was to cool those economies now, rather than wait for their boom to become a bust.