The European Central Bank (ECB) cannot afford to rest on its laurels and is ready to act on persistent inflation risks if the economic situation requires it, ECB policymakers said today.
Their comments helped to firm market expectations that the ECB would push on with higher interest rates in the months ahead, after raising them to a five-year high of 3.75 per cent earlier in March.
Members of the ECB's Governing Council stressed that rates are still supporting economic growth while medium term inflation risks persist, a warning highlighted by today's jump in oil prices to three-month highs.
"We think that the results of the past eight years are very positive, but you must always look ahead," ECB Executive Board member Lorenzo Bini Smaghi said today.
When the economic situation is positive, as it has been recently, the ECB had to focus on the inflation dangers.
"We must always look at the risks. We must act to eliminate these risks," Mr Bini Smaghi said. "We must not rest on the laurels of the last eight years."