Saturday, December 8, 2007

Eurozone inflation risks intensify

From Reuters:

Euro zone inflation risks have intensified and the European Central Bank is ready to act to avoid second-round effects, ECB executive board member Jose Manuel Gonzalez-Paramo said in an interview published on Saturday.

Asked whether the strong euro was stopping the central bank from raising rates, Gonzalez-Paramo said the euro exchange rate was one factor but not the only one."It can make things easier or not. But it is never our objective," he told El Pais newspaper.

"We haven't put off any increase (in rates). We never commit ourselves beforehand ... (but) have upside inflation risks intensified? They have. Do they exist now? They do. Have they intensified? Doubtless." "The ECB is ready to act firmly to avoid the materialisation of second-round effects in the fixing of salaries and prices," he said, in comments which echoed those of ECB President Jean-Claude Trichet earlier this week.