The European Central Bank (ECB) has no plans to implement a series of interest rates rises, Jean-Claude Trichet, ECB president, said yesterday as he sought to head off political criticism of the bank's decision to start monetary tightening.

The ECB is expected to raise rates in December for the first time in more than two years. But addressing a European parliament committee, Mr Trichet made clear that the ECB did not see itself at this stage following the US Federal Reserve in making a series of interest rate increases.

His comments, which led to the euro falling against the dollar, reinforced many economists' expectations that the ECB will follow a quarter percentage point increase next month with maybe a further increase early next year before pausing.

But Mr Trichet strongly defended the ECB's decision to lift rates from the 2 per cent level that has remained unchanged since June 2003.

The Frankfurt-based institution had been "very bold" to hold interest rates for so long across the euro zone at levels not seen since the second World War.

The ECB's credibility would be at risk if it did not act to head off inflationary dangers. He expected the ECB to increase its inflation projections in forecasts published next week.

Mr Trichet received a critical reception, however, from a number of parliament members, with Pervenche Beres, socialist chairman of its economic and monetary affairs committee, expressing fears about the "pretty fragile" euro zone growth outlook and said the ECB would be watched with a "concerned eye".

The ECB's willingness to raise interest rates has pitted central bankers against finance ministers. Jean-Claude Juncker, the Luxembourg prime minister and the political 'Mr Euro', said yesterday that higher oil prices were not feeding through into higher wages. "I have said on several occasions that there are no second-round effects of wages policy and therefore there is no need to raise interest rates," he said.

Mr Juncker's comments reflect the views of many of the 12 euro zone finance ministers, whose monthly meeting he chairs. The European Commission, which conducts its own thorough economic forecasts, has also stressed the absence "so far" of wider inflationary effects from the oil shock.

Mr Trichet told MEPs that it "would not be a good working assumption" to regard the ECB as being at the start of a series of interest rate increases. "We trust that we would never be far away from what would be a desired level of interest rates. There is no process of catching up."

He cited a series of reasons why the ECB believed inflation risks were mounting, even if "second-round" effects from higher oil prices on other costs had not materialised.

They included the alarm signals being flashed by money supply measures and the persistence with which inflation had remained above its definition of price stability - a rate "below but close" to 2 per cent. The ECB, he said, believed that "prevention is always better than cure" and that beating inflation would boost growth. - (Financial Times Service)