“Global price-rise pressures have been annoyingly enduring and don’t show any signs of abatement,” Lipstok, who is also the governor of the Estonian central bank, wrote in an opinion article published in the Postimees newspaper today. “The risk of a persistently higher inflation rate in the euro area has increased.”
Lipstok became a voting member of the ECB’s Governing Council in January when Estonia became the 17th euro-area member. It’s his first public comment on monetary policy since joining the council. Analysts including Carsten Brzeski, senior economist at ING Groep NV in Brussels, have said Lipstok will probably bolster a German-influenced faction on the council given the Baltic nation’s history of tight spending controls.
ECB President Jean-Claude Trichet told the European Parliament on March 21 he has “nothing to add” to his March 3 remarks, when he said policy makers may raise the benchmark rate from a record low of 1 percent at their next meeting on April 7.
“It should be stressed that the Governing Council of the European Central Bank is monitoring the economic situation very carefully and will not commit to future decisions in a form that would render the Council a prisoner of their own words,” Lipstok wrote.
Inflation in the 17-member euro area accelerated to 2.4 percent in February and has been in breach of the ECB’s 2 percent limit since December. The ECB is concerned workers will demand higher wages to compensate for increased living costs.
“The prevention of excessive inflation and the alleviation of inflation fears is the best that a central bank can do to support long-term economic growth,” Lipstok said.
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