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PARIS/FRANKFURT, Jan 29 (Reuters) - The European Central Bank has not ruled out cutting interest rates to a record low, or employing "non standard" tactics to fight the economic crisis President Jean-Claude Trichet said on Thursday.
Analysts expect the ECB to keep rates at 2.0 percent at its policy meeting next week, but in a Reuters poll most forecast it will cut them to an all-time-low of 1.5 percent in March.
Economists are also speculating on whether the ECB might adopt unconventional measures such as following the U.S. Federal Reserve's current policy of buying up debt as an alternative way to boost the economy.
"I said we could engage in non-standard actions and indeed we have already done so, notably on refinancing," Trichet told France's BFM radio from the World Economic Forum in Davos.
He sent a similar message earlier, telling CNN that the ECB could use new, out-of-the-ordinary measures and he didn't want to rule anything out, or indeed in.
Trichet declined to comment on possible interest rate moves before next week's meeting but strengthened analysts' expectations of another cut in March. "We are at 2 percent and I didn't exclude we could go below 2. What I have said is we have a very important rendezvous in March," he said.
Trichet dismissed suggestions that the crisis, which has put government budgets under increasing strain in several European countries, threatened the existence of the euro zone.
"There is no risk that the euro will break apart. There is no risk that the single market zone and the single currency will break apart," he said, echoing what he told Reuters on Wednesday..
International Monetary Fund chief Dominique Strauss-Kahn said in comments published earlier this week that the euro zone needed more coordination on economic policy. "Otherwise, differences between states will become too big and the stability of the currency zone is in danger," he said.
Strauss-Kahn's comments drew a sharp response. European Economic and Monetary Affairs Commissioner Joaquin Almunia said there was no risk at all to euro zone unity, even though bond market pricing currently suggests otherwise.
On Wednesday, chairman of euro zone finance ministers, Jean-Claude Juncker, made similar comments.
Investors have demanded record yield premia recently on bonds issued by a number of euro zone governments compared with those of Germany, with credit rating downgrades for Spain, Greece and Portugal compounding the problems.
But Almunia played down the possibility a joint euro zone bond issue to solve the problems. "There are some voices that are proposing this initiative," he said. "But I do not think this is an initiative to be considered in the short term."
STIMULATION
Trichet said that while forecasts universally pointed to a grim economic outlook for 2009, many government and private sector forecasters expected a "slightly positive" 2010.
"We'll see. The outstanding feature for the current period is uncertainty, very great uncertainty," he said.
"I think we are going through a market correction which is playing out before our eyes," he said. "I don't say the worst is behind us or in front of us, I say we have to be up to our responsibilities."
Trichet said "extremely significant" economic reforms were needed to address the current crisis.
"There needs to be a lot more transparency, transparency in financial instruments, transparency in financial institutions themselves and transparency in the markets," he said.
He declined to point to any particular factor threatening the economy but said the entire system was subject to "very, very strong tensions".
Governments had taken quick action to address the acceleration of the crisis. But he said the billions of euros poured into economic stimulus packages should not blind governments to the need for budgetary responsibility, rules on which are laid down in the EU's Growth and Stability Pact.
"We have always said that in Europe, the margins for manoeuvre offered by the Stability Pact should be used but nothing more -- the whole margin for manoeuvre but nothing but the margin for manoeuvre," he said. "I am confident that European governments understand this message." (Reporting by James Mackenzie and Marc Jones; editing by David Stamp)