European Central Bank (ECB) board member Lorenzo Bini Smaghi said higher-than-expected inflation is a concern and food price increases may be permanent.

But Europe is "on track for gradual recovery", said Bini Smaghi at a business luncheon in Hong Kong today.

"Things are better than expected in terms of growth, unemployment," he said in the speech that was focused on the financial turmoil in Europe and future prospects for the euro.

He also said that reforms needed to be implemented in eurozone countries in which growth was slower.

"With all these changes Europe is ahead of the curve in adjustment and creating conditions for more sustainable growth," he added.

On Friday, Mr Bini Smaghi said that as the economy gradually recovered and global inflationary pressures arose, the degree of accommodation of monetary policy would have to be monitored and corrected if needed.

Reuters