Eurozone chiefs warn over fresh price pressures

INFLATION pressures in the Eurozone are continuing to build, European Central Bank (ECB) officials said yesterday.

The pace of inflation in the 17-country bloc climbed to 2.8 per cent last month, the highest since late 2008. Price pressures in the Eurozone’s powerhouse economy, Germany, came in at 2.7 per cent for April in the pan-European harmonised measure – a slight upward revision from the first estimate of 2.6 per cent.

“Markets do currently anticipate a gradual withdrawal of the monetary accommodation. I personally think that is no unreasonable assumption, given the clear upside risks to price stability,” Belgian central bank governor Luc Coene told a banking seminar.

And Juergen Stark, a senior ECB official, warned against the assumption that the central bank will not hike rates next month.

The ECB failed to use the terms “strong vigilance” and “heightened alertness” in its statement last week – code-words usually deployed to signal an impending rate rise.

“Using code words does not mean a commitment,” he added. “To maintain price stability in the medium term is our overriding principle.”