European Central Bank council member Axel Weber sees euro-zone inflation averaging about 1.5 percent this year, with a possible acceleration at the end of the year to 1.8 percent to 1.9 percent due to base effects.
“Inflation risks are balanced,” he said. “There are upside risks due to possibly higher indirect taxes and higher government expenditure.” Weber said Greece is facing “a significant challenge” to shore up its public finances. “The country must design a credible strategy for the consolidation of its budget and has to convince the rating agencies that there’s a will to go this way,” he said.
The Frankfurt-based ECB is focusing on how to exit from the emergency measures introduced to unfreeze bank lending before it begins to raise interest rates from the record low of 1 percent. Still, rising unemployment in the 16-nation euro region and the fiscal woes of countries such as Greece are clouding the economic outlook