PARIS (MNI) – The European Central Bank is “extremely attentive” to
the risks to price stability in the Eurozone, ECB Governing Council
member Christian Noyer said in a newspaper interview released Friday.
“The acceleration in inflation is essentially due to raw materials
and energy,” the governor of the Bank of France told the French daily Le
Monde. “At the end of the year, we should return within the zone of
price stability.”
“But if social partners do not integrate this price stability in
wage negotiations, this could trigger real inflation,” he warned. “We
are extremely attentive.”
Noyer said that European leaders had learned lessons from the
sovereign debt crisis and that “everyone understands the interest of
having rules and applying them.”
The idea of a Competitiveness Pact for the Eurozone “seems very
good to me,” he said. “No doubt it was something lacking at the outset.
For the monetary union to function well, we have absolute need of
convergence of relative competitiveness in each country.”
“With a common currency, one cannot accept that unit labor costs
diverge radically,” Noyer said, explaining that an economy is weakened
when production costs mount faster than productivity. Lacking the option
of devaluation, such a country must reduce wages and costs “in a painful
way.”
The Bank of France’s business surveys show domestic activity
accelerating at the end of last year and the beginning of this year,
Noyer noted. “One can expect that growth in 2011 will be closer to the
government’s forecast of 2% than to the consensus of economists for
around 1.6%,” he said.
–Paris newsroom +331 4271 5540; e-mail stephen@marketnews.com
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