HELSINKI (MNI) – Long-term inflation expectations in the Eurozone
are well anchored, European Central Bank Governing Council member Erkki
Liikanen said Tuesday.
Speaking at an event here, the head of the Bank of Finland said,
“In the long run, inflation expectations are pretty firmly anchored. As
you can see, we have reached our objective of close to but below 2%
inflation.”
Expectations of future inflation “are crucial when making monetary
policy decisions,” he affirmed.
These decisions take into account “all information,” he said, and
must be “carefully reasoned and broad consensus must exist.”
Central bank independence is vital, he asserted.
Turning to the sovereign debt crisis, Liikanen echoed his
colleagues in insisting that “there is no euro crisis” and that the
common currency is in “a firm situation.”
“For instance, the problem of Ireland was that the banks had
problems,” he explained. “In Portugal the growth has been slow for a
long time. These are separate countries whose economies have been
vulnerable.”
“Each one has to take care of itself,” he said, specifying that
this meant individual countries must see to it “that public deficits
don’t get out of hand and inflation does not accelerate too much. The
problems are multiplied when the recession hits.”
The troubles facing Ireland, Greece and Portugal “are caused by
different reasons,” Liikanen said, pointing out that together, these
three member countries amount to just 6% of Eurozone GDP.
–Frankfurt bureau tel.: +49-69-720142. Email: frankfurt@marketnews.com
[TOPICS: M$X$$$,M$$EC$,MT$$$$,MGX$$$,M$$CR$]
