Mersch Says ECB Will Do Whatever Is Needed to Contain Inflation
European Central Bank council member Yves Mersch said the bank will do whatever is needed to contain inflation in the 15-nation euro region.
“We will do whatever we need to do to be faithful to our primary objective that is inflation,'' Mersch told Bloomberg News in Almaty, Kazakhstan, today. “Our mandate is fixed by the European treaty, and that clearly states that our primary objective is price stability.''
ECB President Jean-Claude Trichet has said the bank may raise its benchmark interest rate by a quarter-point to 4.25 percent in July after inflation accelerated to the fastest pace in 16 years. Investors are betting the ECB will increase the key rate to 4.5 percent by the end of the year.
“I cannot endorse what analysts say,'' said Mersch, who heads the Luxembourg central bank. “We will take decisions each time we meet on the basis of the information. We never pre- commit.''
Soaring food and energy prices will probably push European inflation to 3.8 percent this month from 3.7 percent in May, according to a Bloomberg survey of economists no checking account payday advance. The ECB aims to keep the rate below 2 percent.
While oil prices above $140 a barrel are stoking inflation, they're also eroding purchasing power and damping economic growth.
Asked if higher borrowing costs would hurt the economy, Mersch said ECB policy makers “don't have a mandate like the U.S. Federal Reserve.'' The Fed aims to control inflation as well as foster economic growth and job creation.
“Growth has an influence on prices, so in that respect we also take that into consideration,'' Mersch said.
ECB policy makers next meet in Frankfurt on July 3 to decide on interest rates.
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