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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (9959)	12/2/2002 10:19:20 PM
From: pogbull	Read Replies (3) \| Respond to of 89467

ECB's Issing Sees Greater Risk of `Stagflation' Than Deflation By Julia Kollewe London, Dec. 2 (Bloomberg) -- The European Central Bank's chief economist Otmar Issing said there is a greater risk of slow economic growth coupled with rising prices than of deflation in the economy of the 12 nations sharing the euro. Under present conditions, Issing called the occurrence of deflation ``highly unlikely'' in a speech at the European Finance Convention in London. ``Expectation of lower inflation, yes, risk of deflation around the corner, no,'' he said. Issing raised concerns about stagflation. ``The risk that we might enter a lasting phase of low growth with more or less strongly rising prices, which could be called stagflation, deserves much more attention than the risk of deflation.'' The ECB will probably lower interest rates this week for the first time in more than a year to spur faltering economic growth, analysts said. Consumer confidence in the region fell to its lowest level in more than five years this month. Growth this year will be the least in nine years, the European Commission has forecast. At least 10 ECB officials have signaled a rate reduction is imminent, saying they expect price increases to wane. The ECB aims to keep inflation below 2 percent. The rate slowed to 2.2 percent in November from 2.3 percent the previous month. The ECB is ``not yet satisfied with the present rates of inflation,'' Issing said, according to the text of his speech on the ECB's Web site, which contained some remarks that he didn't deliver. A member of the ECB's executive board, he also dismissed the possibility that Germany is threatened with deflation. ``Notwithstanding low figures for inflation also in Germany, prices are rising and not falling,'' Issing said in the text of his speech. ``According to our definition Germany has achieved price stability.'' eoa quote.bloomberg.com ews&T=news_storypage99.ht&ad=euro_currency&s=APeuXohW9RUNCJ3Mg