31 October 2001, 09:40 ECB Issing:HICP Below 2% In 02, Taking Longer Than Wanted
By Christian Distasio
LINZ, Austria (MktNews) - Eurozone inflation will fall back below
the ECB's 2% price stability limit during the course of next year, but
this process of disinflation is taking longer than the central bank
would have liked, ECB Chief Economist Otmar Issing said Tuesday night.
"There are good reasons to expect that the eurozone inflation rate
will again fall back below 2% in the course of next year, even though
this process is taking longer than we would have liked," Issing said in
the text of a speech here.
Issing made no remarks in his text on the prospects for a near-term
ECB rate cut.
But he stressed that the central bank is "deaf" to calls for it to
abandon its price stability focus to give a monetary boost to the
weakening European economy.
"We have deaf ears from all advice and calls to neglect the primacy
of price stability," Issing said. He cited not only the ECB's mandate
under the Maastricht Treaty but also its "inner conviction" about the
importance of price stability for the economy and society as a whole.
Investors around world share the ECB's view on this, Issing argued,
citing low long-term interest rates based on low inflation expectations.
"Against the background of current price developments and the
weakness of the euro's exchange rate, this can be regarded as a
remarkable achievement for a new currency," he remarked.
Issing noted that monetary policy was "powerless" to prevent the
temporary spikes in food and oil prices earlier this year from driving
up the overall consumer inflation rate.
And in reaction to economic uncertainty after the terror attacks on
Sept 11, the task of the ECB was to calm market nerves "without losing
sight" of its medium-term price stability goal. This was "clearly
achieved," he said.
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