European Central Bank president Mr 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 in Dublin Mr Duisenberg said current interest rates are 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 added.
He said the high 3.4 per cent euro zoneinflation 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 per cent in 2002," he said.
The May rise in inflation had been expected by the ECB, he said.
"Price developments continued to reflect mainly temporary upward pressure from energy and food prices which was taken account of in our previous decisions," he said.
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, Mr Duisenberg said.
AFP