European Central Bank council member Klaus Liebscher said the bank has to be tough when deciding on interest rates and described the current inflation in the Euro zone as alarming, according to an interview with Market News International.
Markets are anticipating the ECB will most possibly increase rates next month. "The most important thing is, on one hand, to bring down the inflation rate itself and, on the other, to anchor firmly inflation expectations" Liebscher told MNI in Innsbruck. "The inflation we have now, which obviously is much more protracted than we thought, is alarming''. Liebscher said slower economic growth alone won't be sufficient to damp inflation. "I do not believe in these ideas", said Liebscher to MNI. "I believe in what we can do actively and firmly on our own behalf with policy measures". Market analysts anticipate the ECB will raise its basic rate from 4% to 4.25% when the monetary commission meets next July 3. Inflation in the Euro zone of 15 countries is currently in a record 3.7%. Since the foundation of the European Central Bank in June, 1998, Dr. Liebscher has been an independent member both of the ECB Governing Council and the ECB General Council. He also represents the OeNB (Austrian National Bank) at the Bank for International Settlement's (BIS) Governors' Meeting and is Austria's governor to the International Monetary Fund.