Inflation dangers in the euro zone are rising, but 2006 will be a good year, European Central Bank Governing (ECB) council member Klaus Liebscher was quoted as saying today.
"Growth rates have been revised up so let's begin with the positive message," Mr Liebscher said. "Secondly, it's clear that 2007 will be afflicted by some risks - rising uncertainties, oil and commodities, the rising danger of rising inflation and of course in the US," he forecast.
His remarks were the latest in a batch of hawkish comments over the weekend from ECB policymakers after the Group of Seven meetings.
Financial markets were today increasing their bets that the ECB may continue tightening beyond the end of 2006.
Mr Liebscher downplayed the dangers that a US slowdown could upset the euro zone outlook in assessing the threats the region faces, however.
"That means in sum that some risks are on the horizon. But I believe Europe is actually relatively secure," he said.
A slowdown in the United States "will affect us, but not to the same degree as was perhaps feared two or three years ago," he said.
"The consequences could be limited. In the past few years in Europe, even though there was a lot of criticism, we've carried out a number of reforms."
The ECB is projecting that economic growth will slow to about a 2.1 per cent annual rate in 2007 from around 2.5 per cent expected this year.
