MILAN - European Central Bank vice president Lucas Papademos said there is a more "balanced" inflation risk in part thanks to the euro's rise against the dollar and lower equity prices. In an interview with the Italian daily Il Sole 24 Ore, Papademos said "risks for price stability has become more balanced". He said recent data show that economic growth in the euro zone will be slower than expected a few months ago but the economy should pick up end-2002, early 2003.
The lack of macroeconomic imbalances, favourable financing conditions for companies and individuals and a gradual fall in inflation should help boost the European economy, Papademos said. Regarding the US, he said the recent news flow indicates that growth will also be slower than expected, but ruled out the possibility of a long period of deflation. Papademos also said that euro zone members have to find an equilibrium between budgetary discipline and flexibility, and the two elements are not incompatible or contradictory with the stability pact. The pact's objectives of erasing budget deficits in the medium term and avoiding excessive deficits have to be respected and maintained, he added. //www.afxpress.com