ECB ready to raise rates if needed

Published Thursday, January 03, 2008

By Agencies

(FILE)

The European Central Bank (ECB) would be ready to raise interest rates again if necessary, new ECB Governing Council member Athanasios Orphanides said in a German newspaper interview published on Thursday.

Orphanides, who has been attending Governing Council meetings for some time in the lead-up to Cyprus adopting the euro on January 1, told Handelsblatt he shared the concerns of other policymakers "who are extremely worried about inflation".

"Just because the ECB Governing Council waited for the turn of the

year does not mean that it should not be ready to raise interest rates

further if that was necessary," he was quoted as saying.

ECB staff projections for inflation to likely fall under two per cent

in 2009 were too optimistic in that they expected the current spike in

food and commodity prices not to feed into wage demands and price

setting, he said.

Countries including Cyprus indexed wage increases to inflation, which hit a six-and-a-half year high in the euro zone of 3.1 per cent in

November, with a similar rate expected for December. (Reuters)

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