ECB's Weber says oil prices may rise again
By Kevin Plumberg
NEW YORK, Nov 9 (Reuters) - Lower oil prices have improved
the outlook for economic growth and inflation in the euro zone,
but there is still a risk that energy prices will rise again,
European Central Bank Governing Council member Axel Weber said
on Thursday.
Global economic expansion is still solidly under way, but
the "gravity" of growth is shifting away from the United
States, Weber added.
Speaking in New York, Weber also said lower oil prices were
favorable for the German and U.S. economies, but that it was
too early to say if prices would stay low.
"Growth rates may be somewhat higher than they were
expected to be a few months ago, and it has produced a more
favorable inflation outlook," Weber said.
However, there is "considerable risk" that oil prices may
start rising again in the future, said Weber, who is also the
president of Germany's Bundesbank. "The likelihood of them
falling again rather than rising is much smaller," he said.
Oil futures were trading up 2 percent on Thursday at around
$61 a barrel, but were still down around 22 percent from a
record high hit in July.
Weber also said the U.S. current account deficit was a
"joint responsibility." He added that China needs a more
flexible currency, reiterating a shared view amongst Group of
Seven nations that a stronger yuan is needed to correct the
imbalance of large U.S. trade deficits and surpluses in Asia.
A week after the ECB left its refinancing rate unchanged at
3.25 percent, Weber offered no thoughts on monetary policy in
the euro zone.
On Monday, the Bundesbank president said the inflation
outlook in the 12-nation euro zone was "alarming," with
consumer price pressures set to top 2 percent in 2007 and
possibly beyond.
Most economists expect the ECB to raise interest rates
again in December to help keep a lid on inflationary pressures.
The European Commission on Monday boosted its forecast for
economic growth next year to 2.1 percent from 1.8 percent
previously.
(c) Reuters 2006. All rights reserved.
