Inflation is expected to remain high for more protracted period than previously thought, said the European Central Bank (ECB) in its June monthly bulletin.
The bulletin said the Governing Council is in a state of "heightened alertness" to ensure price stability for the risks to price stability over the medium term have increased further.
Further, the ECB noted that wage may have a higher than expected growth, taking into account high capacity utilization and tight labor market conditions. Therefore, the ECB will closely watch the inflationary impact of wage deals.
In the bulletin, the ECB also said public finances in the euro area are projected to deteriorate in 2008 and 2009 as governments spend more than they earn, which makes euro zone governments more vulnerable to the future economic turmoil.
(Xinhua News Agency June 13, 2008)
