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ECB determined to ensure price stability

EU

The European Central Bank (ECB) will remain vigilant about rising inflation to maintain price stability in the medium term, the bank's President Jean-Claude Trichet said.

“The ECB has always taken firm and timely action in its monetary policy. There is no place for complacency,” Trichet told an audience at the Brussels Economics Forum organized by the European Commission celebrating the 10th anniversary of the euro.

The Frankfurt-based ECB has long held price stability to be its top priority, even when the eurozone economy is currently under increasing downside risks from financial turmoil, rising oil prices and the marked economic slowdown in the United States.

It has held its benchmark interest rate at a six-year high of 4% for the 11th consecutive month this month in the face of price spikes triggered by surging oil and food prices, while the US Federal Reserve and the Bank of England have both lowered borrowing costs this year to boost growth.

Figures from Eurostat, the European Union (EU)'s statistics bureau, showed annual inflation in the eurozone had eased to 3.3% in April from a 12-year high of 3.6% in March, but it remained well above the 2% ceiling preferred by the ECB to maintain price stability.

Defending the bank's position against inflation, dubbed by some analysts as hawkish, Trichet said he did not see a trade-off between price stability, inflation and growth in the medium and long term.

“What we have in common now is that we pursue price stability, that we are convinced price stability is a prerequisite for sustainable growth and job creation,” he said.

“Price stability in the medium term has to be ensured,” he added.

Trichet said the ECB is paying particularly close attention to wage negotiations in the eurozone, warning any inappropriate pay raise would contribute to a worsening inflationary situation.

As a result of higher living costs, European labor unions recently stepped up demands for better salaries.

Luxembourg Premier and Finance Minister Jean-Claude Juncker, who heads the 15-nation eurozone, also called earlier this week for wage moderation in order to prevent a second-round effect. (Xinhua)

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