MNI: ECB Weidmann: Data Suggest Rising Price Pressure Tendency

By Christian Vits

     FRANKFURT (MNI) - Price pressures in the euro area are on the rise, latest

data show, European Central Bank Governing Council member Jens Weidmann said

Tuesday.

     "A number of signs are suggesting that the tendency towards increasing

price pressures is likely to be sustained," Weidmann said in Frankfurt. "The

robust state of the economy confirms that the consensus view on the Governing

Council that inflation will move towards the inflation target," he noted.

     In Germany this is also demonstrated by the current pay agreement in the

metalworking and electrical engineering industry, Weidmann added. "The agreement

is not only consistent with the expectations underpinning our forecast, but also

shows that the Phillips curve certainly retains validity in Germany."

     With a view to the euro exchange rate, Weidmann said that the recent

appreciation of the currency does not change the accommodative monetary policy

stance in the euro area. "This is because the euro's price trend is -- at least

partly -- a reaction of the euro area's improved growth prospects," the

Bundesbank President said.

     Although exchange rate movements may exert a smaller impact on price trends

than they did in the past, the ECB will "keep a close eye" on the impact of

exchange rate changes on the objective of price stability, Weidmann stressed.

--MNI Frankfurt Bureau; +49 69 97782671; email: christian.vits@marketnews.com

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