The European Central Bank (ECB) stressed the need for strong vigilance against upward pressures on inflation in the October edition of its monthly bulletin, published today.
The bulletin's editorial stuck closely to the more hawkish tone in the statement ECB President Jean-Claude Trichet gave after last week's decision to hold interest rates at 2 per cent, when he said that monetary policy was still appropriate.
"Strong vigilance with regard to upside risks to price stability is warranted," the ECB said in the bulletin. This compared with the ECB's call for "particular vigilance" last month.
Nonetheless, the ECB said that there was no clear evidence of growing domestic inflation pressures in the euro zone, and that it expected elevated inflation in the short term.
The economy could pick up gradually over the rest of the year, but oil prices, weak consumer confidence and global trade imbalances were downside risks, the ECB added.
