European Central Bank president Mr Wim Duisenberg said the ECB remains confident that annual average inflation will be below or close to 2 per cent this year, despite the recent rise in oil prices.
The ECB had previously said it expected average inflation to be safely under 2 per cent, the ceiling for its price stability target.
Mr Duisenberg said there are risks to both inflation and growth if oil prices remain high, or if the rise in oil prices continues, but he said such a scenario is not really likely. "It's a big if," he said.
He said he agreed with ECB chief economist Mr Otmar Issing that any risks to price stability are on the upside.
"If there are risks, they are mainly on the upside," he said.
Mr Duisenberg reiterated the ECB's view that the current level of interest rates remains appropriate to maintain price stability over the medium term, but declined to speculate on future interest rate movements.
AFP