ECB: "Respect the goals of rehabilitation"

13 Jul

Posted by flicker as BCE, News

In the July Bulletin of the European Central Bank "expresses concern about the pressures in several countries to loosen the objectives of fiscal consolidation previously established" and reiterates how "in the current overall economic environment, it is essential that all governments comply with the provisions of the Pact of stability on the balance of public finances in good economic times and keep faith with the commitments made at the meeting of 'euro group of 20 April in Berlin. "in the bulletin reiterates that these commitments must be reflected in the programs of the budget for 2008 so that governments fail again to correct the balances of government accounts during economic good." On the inflation front, the ECB in his report says that after a "slight decrease" of 'inflation, is a "significant increase" to the end of' years and points out that on price is expected influence determined by the possibility of further price increases of oil "and not least" the continuous improvement of the labor market situation "which would lead to" constraints that may induce a particular wage more sustained expectations. In terms of dynamics of prices set by firms, the Eurotower stresses weighing on the 'inflation could be increasing "the power of firms in determining prices in market segments with low competition," and inviting the social partners to assume their responsibility expressed as "wage agreements should be sufficiently differentiated to take account of the positions in terms of price competitiveness, the still high level of unemployment in many economies, and is the productivity of the trends by sector and so it's very important "to avoid wage developments that would generate inflationary pressures and reduce the purchasing power of all citizens of the 'Euro area." in the Bulletin can be seen as further upside risks to price stability arise from increases in administered prices and indirect taxes in addition to the anticipated date, the policy focus from pro to budget in some countries. "