PARIS, Nov 19 (Reuters) -ECB President Jean-Claude Trichet said on Thursday the central bank would proceed with a gradual withdrawal of unconventional policies and a top EU official said it was not time to put exit strategies in place.
European Union Economic and Monetary Affairs Commissioner Joaquin Almunia said it would be a mistake for extraordinary monetary policies to be withdrawn before fiscal exit strategies had been agreed.
He said it was too early for that to happen in Europe and reiterated his belief that supportive fiscal policies should only be withdrawn in 2011.
"We are committed naturally at the opportune time to unwind gradually these non-conventional operations alongside the issue, which is for us absolutely fundamental, to maintain and to be extremely attentive towards the medium-term anchor of medium-term inflation," Trichet said at a conference to celebrate 10 years of the euro.
He said the EU's Growth and Stability Pact was still "extremely important."
Almunia said rising deficits in Europe, caused by slowing growth and increased spending to help economies overcome the financial crisis, were not a major problem in the short term.
However, Europe must prepare exit strategies to make sure the credibility of fiscal policies was not called into question over the medium term.
"It is obvious that we need to start by defining budgetary strategies because now we know that if monetary policy starts before, the consequences are worse," Almunia said.
He said some countries should get working on fiscal consolidation straight away, but overall the EU was in agreement that budget measures should not be scaled back in 2010.
Earlier on Thursday, a French panel studying the potential size and use of a new French loan presented its plan to President Nicolas Sarkozy. They suggested 35 billion euros of state investments.
The Organisation for Economic Cooperation and Development said the proposed loan could complicate French efforts to improve public finances.
Economy Minister Christine Lagarde, speaking to the conference by video, said it was important for all countries to commit to "demanding" public finance policies. (Reporting by Anna Willard, Tamora Vidaillet, Jean-Baptiste Vey, Marc Joanny; Editing by Crispian Balmer and Jan Paschal)