Brussels, 14/09/2005 (Agence Europe) - At his hearing by the Parliamentary committee on economic and monetary affairs, the president of the European Central Bank, Jean-Claude Trichet, confirmed in Brussels on Wednesday that the changes in oil prices have "led to an upward revision of the inflation forecasts for the year to come". The figures of the services of the ECB, which were presented at the end of the last meeting of its council of governors, predict that the inflation rate in the euro zone will fluctuate between 2.1% and 2.3% in 2005 and between 1.4% and 2.4% in 2006 (EUROPE 9018). Oil prices have continued to increase since the beginning of the year, and "market operators anticipate that the squeeze on the oil market will continue", he stressed, noting: "at this stage, we feel that the overall impact of Hurricane Katrina is likely to remain limited and temporary". As for growth, the forecasts were also reviewed "slightly downwards" (between 1 and 1.6% of GDP for 2005 and between 1.3 and 2.3% in 2006), but "conditions continue to be in place for positive fundamental factors to influence our prospects and for economic activity to be redressed beyond the short term". There are still a risk that it could fall, and this is "mainly related to higher oil prices, low consumer confidence and concerned at world imbalances".
On the exchange rates, Mr Trichet declined to make any precise comment ahead of the meeting of the finance ministers and central bankers of the G-7, which is to be held at the end of September in Washington, telling Cristobal Montoro Romero (EPP-ED, Spain), that the "collective message is to call for a coherent, but gentle, appreciation of the currencies of certain Asian emerging countries". The flexibility brought in this July into the Chinese exchange regime was "small", but is a "good initiative", said Mr Trichet. "It is up to the Council of ministers to tell you whether economic coordination" in this period of high petrol prices is efficient, said Mr Trichet in answer to a question put by the Socialist president of the Parliamentary committee, Pervenche Berès of France. Reiterating the message of the finance ministers at the informal meeting in Manchester (EUROPE 9025), Mr Trichet also warned against a mistake which proved very expensive to Europe in terms of growth, during the oil crises of the 70s and 80s: "above all, let us not allow the production sector to bear the brunt of the extra price burden", he pleaded.
"Any provision of the treaty must be applied strictly, and the Maastricht criteria must be applied also in order to join the euro zone", Mr Trichet explained to Alexander Radwan (EPP-ED, Germany), who had raised the question of the possibility for certain Member States which joined the Union at the latest wave of enlargement to adopt the euro in 2007. He told Margarita Starkevièiûtë (ALDE, Lithuania), who asked whether the euro zone would not be too big to be able to maintain the stability of the common currency, that "the decision-making process will function correctly". "We must bear in mind that the consolidated GDP of the new Member States represents just a small proportion of the GDP of all of the members who are already in the euro zone", he added. Whilst German Liberal Wolf Klinz raised the possibility for the Member States to refuse to adopt the euro by referendum, Mr Trichet pointed out that only two member states had an opt out (United Kingdom and Denmark: Ed) and pointed out that for the others: "once the criteria are fulfilled, these countries have undertaken to join the euro zone, and we will stick to this legal interpretation".