ECB Chief Plays Down Inflation Worries --- Duisenberg Warns Unions About Wage Demands; Rate Left Unchanged
FRANKFURT -- European Central Bank President Wim Duisenberg said an expected increase in euro-area inflation isn't cause for immediate concern, but he warned against "excessive" union wage demands based on that rise.</br></br>At the ECB's monthly news conference, Mr. Duisenberg repeated the euro has "strong upward potential" based on improving prospects for euro-zone economic growth and said he was pleased the currency has recently moved away from near parity with the dollar. Late in European trading, the common currency of the 11-nation euro zone was at $1.0332, strengthening from $1.0302 the previous day. In late New York trading, the euro rose to $1.0317 from $1.0313 Tuesday.</br></br>The ECB, as expected, left its refinancing rate unchanged at 3%, where it has been since a half-percentage point rise in November.</br></br>In addition to the good prospects for euro-zone growth, Mr. Duisenberg noted "generous" liquidity in the market and expected upward pressures on consumer prices. Although such comments could be seen as paving the way for an eventual interest-rate rise, Mr. Duisenberg stopped well short of sounding an inflation alarm. Rather, he said consumer-price increases the ECB sees for early 2000 "should not give undue cause for concern."</br></br>Euro-zone government bonds rose on Mr. Duisenberg's remarks, which markets took as lessening the chances of a nearterm rate rise. However, European stocks generally ended lower as markets focused on the possibility rates will soon rise in the U.S.