Mersch Growth Warning May Signal Shift in ECB Stance |
| Bloomberg - Jan 17, 2008 |
European Central Bank council member Yves Mersch's warning of slower growth signals that policy makers may not follow through on their threat to raise interest rates.
``We have certainly downside risks to economic activity,'' Mersch, 58, said in an interview at his office in Luxembourg on Jan. 15. While inflation risks have also risen, ``we're not unaware of mitigation to price developments,'' he said, citing a stronger euro, near-record oil prices, the cooling U.S. economy and higher credit costs.
Mersch's comments, the fifth from an official this week to suggest that the ECB is toning down its inflation-fighting language, led to the biggest drop in the euro in a month. While President Jean-Claude Trichet on Jan. 10 threatened to raise rates, Germany's Axel Weber said yesterday officials shouldn't ``over-dramatize'' the pick up in inflation.
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- Posted: 2008-01-17 09:46:52
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