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ECB Must Consider Risk Of Econ Slowdown

Wednesday, January 23, 2008

DAVOS: OECD Sec Gen: ECB Must Consider Risk Of Econ Slowdown

DAVOS, Switzerland -(Dow Jones)- The European Central Bank has to consider the risk of a sharp economic slowdown during its upcoming interest rate decisions, said Angel Gurria, secretary general of the Organization for Economic Cooperation and Development, Wednesday.

"They have to look at the balance of risks, weighing slower growth against rising inflation. Until now, it seems they only have been focused on inflation," Gurria told Dow Jones Newswires on the sidelines of the World Economic Forum in Davos, Switzerland.

The ECB has held its key rate steady at 4.0% despite growing signs that the euro zone economy is slowing. The U.S. Federal Reserve, by contrast, has cut its discount rate to 4.0% from 6.25% over the past year, including a 75 basis-point cut after an emergency meeting Tuesday.

ECB President Jean-Claude Trichet said the central bank only considered two options during its January meeting - raising rates or holding them steady. The ECB is worried that rising oil and food prices and growing calls from labor unions for higher wages will boost inflation. Inflation in the 15-country euro zone was 3.1% in November and December, well-above the ECB's 2.0% ceiling.

Posted by MOHAMED SAID at 6:35 AM  


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