BERLIN (MNI) – The ECB is “extremely vigilant” to be sure that
rising commodity prices do not lead to second-round effects, ECB
Governing Council member Christian Noyer said Friday.
The central bank’s base scenario remains that the current inflation
spike will be short-lived, the governor of the Bank of France told a
press conference after a Franco-German summit here.
“That is the base scenario today: that the rise in commodity
prices, especially energy and food prices, will drive inflation in the
very short term slightly above 2%” in the Eurozone, Noyer explained.
“Inflation should then before the end of the year gradually get
back to the level which we estimate as being in line with price
stability,” the central banker asserted.
“However, we will be vigilant, because the spike of commodities
creates risks,” Noyer cautioned. “Thus, we will by extremely vigilant
that second-round effects do not appear.”
Bundesbank board member Andreas Dombret, who replaced Bundesbank
President Axel Weber at the meeting, echoed Noyer’s remarks, also
stressing that energy and food markets were being monitored “very
carefully.”
–Berlin bureau: +49-30-22 62 05 80; twidder@marketnews.com
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