The European Central Bank will reconsider its rates-on-hold policy as soon as the eurozone economy, currently held back by high oil prices, revives, ECB Governing Council member Nout Wellink was quoted as saying today.
Mr Wellink said inflation was proving surprisingly stubborn in the 12-nation zone, even though there was so far no sign of oil prices feeding into wages and consumer prices.
Excess liquidity remained the biggest threat to price stability over the medium term.
"I think what you should realize is that inflation is not ... low," he said in an interview with Market News International in Washington, where he attended Group of Seven meetings.
"It is close to two percent, but it's higher than one would expect perhaps in the present economic circumstances. It's more sticky in a downward direction than some of us would have expected it to be. The moment the European economy comes back on track, I think, we should reflect twice on what to do, given what I said about inflation."
Mr Wellink confirmed interest rate rises were off the ECB's agenda for the short-term, given the shaky growth outlook. But he said the economy was still expected to turn around. "(High oil prices are) slowing down a little bit the recovery, that's quite clear," Mr Wellink said. "But for the time being, there are no second-round effects, and that is to say that it's a temporary phenomenon and it's just delaying the recovery. And I'm speaking of the European economy coming a little bit later back on track."
ECB President Jean-Claude Trichet said the Governing Council discussed neither a rate rise nor a cut at their last meeting on April 7th, and Mr Wellink said financial markets could take a message from his comments.