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To: Alex who wrote (24029)	12/9/1998 2:59:00 PM
From: goldsnow	Respond to of 116764

ECB to worry about both deflation and inflation 01:01 a.m. Dec 09, 1998 Eastern FRANKFURT, Dec 9 (Reuters) - The European Central Bank will be just as concerned about deflationary tendencies, should they arise, as it will be about inflation pressures, the bank's chief economist Otmar Issing said. Speaking at a dinner with Frankfurt financial journalists on Tuesday evening, Issing said: ''Deflation is as dangerous as inflation. No one can fully rule out the possibility of this.'' But Issing also made clear that he did not see deflation emerging in Europe at the moment, adding that the very low inflation in the region was in part due to external factors such as the weak oil price. Drops in prices only really became dangerous when the consumer started to delay purchases due to the expectation that goods would become cheaper, he said. ''Deflationary processes really become a problem when the consumer thinks: 'I'll just wait -- then it will be cheaper','' he said. ''That is the really dangerous, really critical phase. You need to act before that kicks in.'' But this was clearly not the situation in Europe at the moment. ''If you look at the price expectations...there is no signal for this kind of danger,'' Issing said -- adding that inflation was generally seen continuing to run at over one percent. ((Janet Northcote, Frankfurt Newsroom +49 69 756525, frankfurt.newsroom+reuters.com)) Copyright 1998 Reuters Limited.