FRANKFURT (AFX) - Bundesbank council member Juergen Stark said inflation in the euro zone will remain above the European Central Bank's stability ceiling of 2 pct "for some time".
In a speech delivered to the Alzey Volksbank, Stark said factors beyond the control of the ECB are responsible for the persistently high inflation. These include the high price of oil and "administratively determined" price rises in Germany, he said
Certain tax rises in Germany contributed some 0.5 pct to the current high level of German inflation, he noted.
"The (euro zone) inflation rate will still lie over the 2 pct level for some time", he said. Stark added that the current slowing of growth in the euro zone will not lead to a pronounced slump. "Rather there is much to argue that production in Europe will continue to rise", he said. He said domestic demand will also be boosted by tax cuts that have come into force in several euro zone countries at the start of 2001. However he added the euro zone will not escape the effects of the U.S. slowdown. "Europe is in a certain way affected by the developments in the U.S. and also by the effects which happen through third countries", he said.