HELSINKI (MNI) – The Eurozone is not facing a significant price
stability risk, with inflation expected to stay beneath the ECB’s limit
this year and next, European Central Bank Governing Council member Erkki
Liikanen said Wednesday.
“There is no large inflationary pressure in the Eurozone,” Liikanen
said at a press conference where he presented the December Bulletin of
the Bank Finland, which he heads. He noted that EMU inflation is
currently running around 2% and that according to the latest ECB staff
forecasts it is expected to decline to about 1.5% in 2011. The ECB’s
inflation goal is below but near 2%.
Liikanen also renewed the call on countries with managed exchange
regimes to move towards more flexible currency policies, saying this
would help even out global economic imbalances.
He also downplayed the idea that the ECB is taking too much risk
onto its balance sheet with emergency measures that include unlimited
liquidity allotment at refinancing tenders and purchases of government
debt, in large part from peripheral EMU countries considered by markets
— and rating agencies — to be at the highest risk for default. The ECB
takes the actions it considers “appropriate,” he said in response to a
question about the risk.
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