DUBLIN (AFX) - European Central Bank president Wim Duisenberg said the latest data from the euro zone has not changed the ECB's assessment of price stability risks.
Speaking at a news conference here, Duisenberg said current level of interest rates is appropriate for maintaining price stability in the euro zone.
"Against the background of available information, the current level of ECB key interest rates remains appropriate to ensure that the euro area economy will be able to maintain price stability," he said. "Overall, the latest information did not change our assessment of the outlook for price stability over the medium term," he said. He said the high 3.4 pct rise in HICP inflation in May was due mainly to transitory effects from energy and food prices.
"We continue to expect the currently high rates of inflation to remain a transitory phenomenon and, in the absence of further unfavourable price shocks, inflation rates should fall below 2 pct in 2002," he said.
The May rise in inflation had been expected by the ECB, Duisenberg said. "Price developments continued to reflect mainly temporary upward pressure from energy and food prices, which was taken account in our previous decisions," he said.
Duisenberg said recent euro zone GDP data for the first quarter and April industrial production data had pointed to a moderation of activity in the euro area.
But he added euro zone this year is expected to remain broadly in line with trend potential, which the ECB defines at a rise of 2-2.5 pct.
He said the ECB continues to remain "vigilant" on developments which could affect the balance of risks in the euro zone, including real GDP growth.
Wage moderation should be continued as it is "crucial" the current temporary hike in prices does not become more longer lasting, Duisenberg said.