FRANKFURT (MNI) – European Central Bank Governing Council member
Yves Mersch on Thursday underlined the importance of inflation
expectations remaining firmly anchored and, noting further upward
pressure from high commodity prices, stressed that second-round effects
must be avoided.
“At the current juncture, new sources of inflationary pressure may
therefore emerge,” the governor of the central bank of Luxembourg said
in a text for delivery in Tokyo.
“Dynamic economic growth” combined with rising inflation in
emerging markets “bears the risk that imported inflation will come to
play a larger role in domestic price levels in the industrialized
world,” he said
“The recent increases in prices of certain agricultural products
and raw materials may therefore be more persistent than currently
assumed,” he said. “The lagged effect of food prices could still add a
layer of headline inflation.”
“In other words, the disinflationary impact of globalization, from
which the industrialized world has benefited in the last 20 years, could
turn into an imported inflationary impact.”
Looking within the Eurozone, Mersch was confident that Greece could
return to positive growth and a position of debt sustainability,
provided that it applied the EU-IMF reform program.
He also stressed that “both solidarity and stability-compliant
economic and fiscal policy are needed.”
“They are the two sides of a coin in a monetary union. I am
confident that the respective players live up to their
responsibilities,” Mersch said.
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