FRANKFURT (MktNews) - Inflationary pressures in the eurozone have eased a little, but upward threats remain and it is thus too soon to cut official interest rates, European Central Bank (ECB) Governing Council member Ernst Welteke said in an interview published over the weekend.
"What I said in early February still holds true. The upward risks to price developments have eased a little, but at the moment upside risks remain -- including from the oil price effect," Welteke told the Saturday edition of the daily Westfalen-Blatt.
"In February, eurozone HICP rose 2.6% y/y after 2.2% y/y the previous month," Welteke said. "That is why it would be premature for interest rates to move in the other direction already."
Welteke's comments underscore the impression that the ECB will maintain its current wait-and-see attitude for some time.
Welteke avoided a question on the foreign exchange rate of the euro, refusing to predict when it would rise to parity. "No central banker and no economist can predict that," he said. "The exchange rate is a currency's price, set by the free play of market forces, and expressed in another currency."
So many aspects were involved in this process that it is impossible to give a clear cut answer on when euro-dollar returns to parity, he said.
Welteke also repeated that exchange rate fluctuations have not increased since the introduction of the euro and again noted the fluctuations of the deutschemark against the dollar between 1985 and 1995. "Today's fluctuations are clearly smaller," he said.