ECB chief economist says inflation risks on 'upside': report

10th October 2010, Comments 0 comments

Inflation risks are on "upside", the European Central Bank's chief economist said on Sunday in an interview with a website, warning against keeping interest rates too loose too long.

"Inflation rates should remain moderate overall, but the risks to this outlook are slightly tilted to the upside," Juergen Stark said in an interview with specialist Internet publication Emerging Markets.

Inflation concerns at the ECB draw a sharp contrast with views at the US Federal Reserve which has said it could pump more liquidity into the financial system in a bid to revive the economy and avert deflation.

"We are fully aware that maintaining an accommodative monetary policy stance for too long can pose serious risks to our economy and, ultimately, to price stability over the medium term," Stark said.

He said that extraordinary measures taken by the ECB in the face of the financial crisis must not "sow the seeds of new imbalances or excesses."

"Thus, the ECB's key interest rates and overall provision of liquidity will be adjusted timely and appropriately," he said.

"Our unambiguous guiding post for the timing and sequencing of exit from monetary accommodation is the outlook for medium-term risks to price stability."

Eurozone inflation rose to 1.8 percent in September, the highest 12-month figure in nearly two years and spot on the ECB's target of close to but less than 2.0 percent.

© 2010 AFP

0 Comments To This Article