Inflation risks lower, not disappeared-ECB's Trichet

Thu, Oct 2 2008, 13:09 GMT
http://www.afxnews.com

FRANKFURT, Oct 2 (Reuters) - Upside risks to euro zone inflation have diminished somewhat due to a weakening economy, but they have not disappeared, European Central Bank President Jean-Claude Trichet said on Thursday.

After the Governing Council left interest rates at 4.25 percent, as expected, Trichet said ECB policymakers recognised "the extraordinary high level of uncertainty stemming from latest developments" on turbulent financial markets.

"Economic activity in the euro area is weakening with contracting domestic demand and tighter financing conditions," Trichet told a news conference.

"Annual inflation rates are likely to remain well above levels consistent with price stability for some time," he said. However, he added: "With the weakening of demand, upside risks to price stability have diminished somewhat but they have not disappeared."

(Reporting by Krista Hughes; writing by David Stamp) Keywords: ECB RATES/TRICHET

tf.TFN-Europe_newsdesk@thomsonreuters.com

cmr

The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited For more information and to contact AFX: www.afxnews.com and www.afxpress.com