The surge in euro-zone consumer prices seems to have peaked, but second-round price effects threaten to keep inflation at a high rate, said European Central Bank Governing Council member Ewald Nowotny said Friday.

“Euro-zone inflation is much too high. The rate of price increases appears to have peaked now, but there is still every reason for heightened alertness towards inflationary risks,” Nowotny said, speaking at his first press conference as Governor of the Austrian central bank, OeNB, and member of the ECB’s Governing Council, after having replaced Klaus Liebscher on both posts Sept. 1.

Nowotny dubbed the light 0.1 percentage point softening of euro-zone inflation to 3.9% in August on the month, as a “momentum” that must be utilized.

“We must not allow for second-round price effects to ruin our efforts to reduce euro-zone inflation,” Nowotny said.

Nowotny called upon politicians, European companies and employees to be modest in expenditures, price hikes and wage negotiations to prevent broad-based second-round price effects from materializing in the near future.

He said the ECB alone can’t control inflation, but also has to rely on the market participants to play their roles.

Source: http://www.djnewswires.com/eu

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