-'May Still Take Some Time' Before HICP Falls Below 2% Due to Continuing Pass-Through Effects From Oil Prices, Euro Weakness
--Says 'No Sign' U.S. Slowdown Having Clear, Sustained GDP Impact on EMU
--Says EMU Growth Remains 'Robust,' Cites Expectations of Growth 'Just Below 3%' in 2001 and 2002

FRANKFURT (MktNews) - Inflation risks in the euro area have become "more balanced" in recent weeks but still remain, so that the European Central Bank (ECB) continues to be "very vigilant," ECB Governing Council member and Austrian National Bank Governor Klaus Liebscher said.
The effect of higher oil prices and the euro's weakness continue to be "noticeable" and are still feeding through to eurozone consumer prices, meaning that it "may still take some time" before HICP inflation falls below the ECB's 2% medium-term price stability ceiling, he said.
At the same time, growth in the 12-nation monetary area remains "robust," with economic projections pointing to an expansion of activity of "just below 3%" this year and next, Liebscher said, according to the text of a speech delivered Monday evening.
Liebscher also said there was "no sign" that the U.S. slowdown has had a significant impact on European economic growth.
Liebscher's remarks, along with similar comments over the weekend from one of his Council colleagues, Belgian National Bank Governor Guy Quaden, suggest that the ECB has not budged from its wait-and-see stance on interest rates and that an expected rate cut won't in the near future.
"Looking at the current situation, the ECB Council -- despite strong rate cuts by the Fed at the start of this year -- has left key interest rates (in the euro zone) unchanged and adopted a wait-and-see stance, especially in view of the further development of oil prices and the effects of economic developments in the United States on the outlook for global growth," Liebscher said, according to the text of his speech.
"At the moment there are no signs that the weakening of the U.S. economy has had a clear or sustained impact on the euro area," he said.
According to Liebscher, recent economic data indicated that the eurozone price stability risks have become "more balanced, but remain nevertheless." In particular, oil prices developments must be "closely" monitored.
As to the euro, Liebscher said that the currency's historical lows last year were "in no way justified" by eurozone economic fundamentals.
"The expected weakening of U.S. growth and continued robust growth in the euro area have for some time now led the international currency markets to corrections in the exchange rate between the euro and the dollar," he said. The text of Liebscher's speech made no reference to the euro's latest bout of weakness.
Liebscher also repeated the ECB's concern about the potential for second-round inflationary risks, calling for "moderate" wage demands by eurozone unions and "moderate" price increases by companies.
"In any case, we in the ECB Council will remain very vigilant with regard to the future risks to price stability," said Liebscher, again urging continued fiscal consolidation and structural reform progress.