BERLIN (MNI) – European Central Bank Executive Board member Juergen
Stark said in a radio interview on Wednesday that he sees no inflation
risks in the Eurozone for the foreseeable future.
Inflation in the Eurozone this year will be “somewhat higher” than
last year but there will be “still price stability,” Stark told German
Deutschlandfunk.
“In any case I see no inflation danger for the foreseeable future,”
he stressed.
Stark remarked that inflation is rising somewhat in some emerging
countries in Asia and South America. Yet, as long as economic momentum
does not pick up in the Eurozone, “we won’t have this danger of a higher
inflation,” he said.
The fact that the ECB is now buying government bonds in the
secondary market is not increasing inflation pressure, the central
banker argued. “The excess liquidity is being collected again and there
arises no inflation pressure…we’re not printing money,” Stark
explained.
The ECB will hold the government bonds until maturity, so excess
liquidity will be taken out elsewhere, he pointed out.
Stark asserted that there had been no political pressure on the ECB
regarding its decision to start buying government bonds. “If there would
have been [political pressure] we would not have bowed to it,” he said.
The global crisis is still continuing and has entered a new phase
“where public debt has come into focus,” the central banker affirmed.
“This holds true not only for Europe, this holds true not only for the
Eurozone, but also for many other economies,” he said.
Stark reaffirmed that the ECB won’t allow inflation to rise in
order to ease the debt burden of some countries. “This would be the
monetarisation of debt…we will resist this,” he stressed.
Yet, he acknowledged that there could heightened political pressure
on central banks in other parts of the world. Stark noted, though, that
“we’re dealing now with independent central banks everywhere.”
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
[TOPICS: M$$EC$,M$$CR$,MT$$$$,M$X$$$,MFX$$$,MGX$$$,M$G$$$,M$$FX$]
