ECB wary of rising inflation

BRUSSELS – European economic growth will be better in 2007 than previously predicted, jobs are being created faster than in any year this decade and inflation is likely to remain subdued, the European Commission said on Monday.

The European Central Bank begged to differ, with ECB council member Axel Weber declaring in Cologne that inflation signals at the moment were alarming. With finance ministers meeting in Brussels, the Commission published new economic forecasts, raising its prediction for 2006 growth in the 12-country euro zone marginally to 2,6 from 2,5 per cent, and for 2007 sharply to 2,1 per cent from 1,8.It forecast growth of 2,2 per cent in 2008 in the common currency zone and 2,4 per cent in the European Union, roughly on par with US growth forecast at 2,3 per cent, Economic and Monetary Affairs Commissioner Joaquin Almunia said.The new figures average out at growth of 2,3 per cent a year over the three years of 2006-2008, higher than the two per cent level that is generally considered Europe’s potential rate.Rising employment would help to spur consumer demand, which would offset a smaller boost from exports, Almunia said, noting that the economic recovery that kicked in earlier this year was finally helping governments reduce public deficits and debts.”The rising trend in debt is finally reversed.That is good news,” Almunia told a news conference.The forecasts set the scene for a working dinner of euro zone finance ministers and European Central Bank President Jean-Claude Trichet on Monday.The talks reconvened yesterday with ministers from the rest of the 25-country EU.Nampa-ReutersWith finance ministers meeting in Brussels, the Commission published new economic forecasts, raising its prediction for 2006 growth in the 12-country euro zone marginally to 2,6 from 2,5 per cent, and for 2007 sharply to 2,1 per cent from 1,8.It forecast growth of 2,2 per cent in 2008 in the common currency zone and 2,4 per cent in the European Union, roughly on par with US growth forecast at 2,3 per cent, Economic and Monetary Affairs Commissioner Joaquin Almunia said.The new figures average out at growth of 2,3 per cent a year over the three years of 2006-2008, higher than the two per cent level that is generally considered Europe’s potential rate.Rising employment would help to spur consumer demand, which would offset a smaller boost from exports, Almunia said, noting that the economic recovery that kicked in earlier this year was finally helping governments reduce public deficits and debts.”The rising trend in debt is finally reversed.That is good news,” Almunia told a news conference.The forecasts set the scene for a working dinner of euro zone finance ministers and European Central Bank President Jean-Claude Trichet on Monday.The talks reconvened yesterday with ministers from the rest of the 25-country EU.Nampa-Reuters